South African retailer SPAR annual profit slumps, withholds dividend

JOHANNESBURG (Reuters) -South African grocery retailer and wholesaler SPAR Group reported a 47% slump in annual operating profit due to a failed IT system, impairments and lower-than-expected sales growth, and said it would not declare a final dividend.

SPAR, which also operates in Switzerland and parts of the UK, said on Thursday that group operating profit fell to 1.8 billion rand ($96.17 million) in the full-year ended Sept. 30 from 3.4 billion rand in 2022. Consequently, headline earnings per share fell 47.7% to 606.6 South African cents.

"The group has faced various challenges during the year. Consequently, the board believes it is prudent to not declare a dividend for the year," the retailer said.

SPAR's failed implementation of the SAP enterprise resource planning system at the KwaZulu-Natal distribution centre caused a loss of group turnover estimated at 1.6 billion rand and a 720 million rand hit on profit for the province.

It also made impairments amounting to 560 million rand related to the Irish and Polish businesses. The retailer is looking to sell the loss making Polish business, which gave rise to the impairments.

SPAR also said profit was hit by lower-than-expected turnover growth, coupled with significant inflationary cost increases across all of its regions.

Group turnover rose 10.1% to 149.3 billion rand, with Southern Africa, its biggest market, delivering turnover growth of 5.1%, reflecting the general consumer environment and IT system challenges, it added.

($1 = 18.7165 rand)

(Reporting by Nqobile Dludla; Editing by Kim Coghill and Rashmi Aich)