As South Africans brace for the financial implications of the higher fuels and interest rates, Spar is working hard to restore profit margins in its Southern Africa business.
SPAR Group, the JSE-listed supermarket group, saw its share price plunge 16% on Friday after it warned that headline earnings are expected to fall by between 60% and 50% for the 26 weeks to March 27 as margins in Southern Africa shrank.
Continuing problems in the KwaZulu-Natal operations once again featured among the main reasons for the earnings decline, and “key senior management changes” had been made.
The earnings decline comes at a precarious time for South African retailers, as consumer disposable incomes and the grocers themselves come under pressure from higher fuel prices, inflation, and interest rates. SPAR's directors warn they may also face headwinds in the form of a need for further provisioning, intensifying competition from peers, and continuing macroeconomic uncertainty.
The share price was trading at R48,05 on Friday afternoon, 15,08% lower than the opening price, while the price is 56,77% lower over a year, a significant decline.
