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The Spar Group has reported that its full-year operating profit to end-September 2023 almost halved to R1.8 billion.

Bruce Whitfield interviews Angelo Swartz, newly appointed Group CEO of Spar South Africa.

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Spar has announced it’s scrapping its final dividend, after doing the same with its interim dividend in June.

Posting its year-end results on Thursday, the Group cited the costly implementation of its SAP software system in KwaZulu-Natal and impairments with its Poland business as restricting factors.

RELATED: Loadshedding slashes Spar Group’s profits – no dividend for shareholders

The retailer reported that its full-year operating profit to end-September 2023 almost halved to R1.8 billion, from R3.4 billion the previous year.

Headline earnings per share (HEPS) fell 47.7% to 606.6 cents.

Spar Group’s results for the financial year ended 30 September 2023 – thespargroup.com

Bruce Whitfield interviews Angelo Swartz, newly appointed Group CEO of Spar South Africa, and asks about what went wrong with the SAProllout in KwaZulu-Natal.

Swartz clarifies that it was limited to KZN, and the rollout has now been paused to address design problems.

We’ve got six distribution centres around the country, and the approach we took to the SAP rollout was to do one distribution centre at a time… KZN was the first, and obviously we have since decided to pause the rollout until we get the system design optimised before we start approaching our other distribution centres.

Angelo Swartz, Group CEO – Spar SA

It’s a hugely complex project… Thankfully we’ve now stabilised, but it was a very challenging time. The benefit of having six distribution centres is we were able to isolate the challenges by supporting retailers in and around KZN from the adjacent DCs in Johannesburg and Port Elizabeth.

Angelo Swartz, Group CEO – Spar SA

Despite the challenges faced by the Group, Swartz is relatively upbeat about the future.

On a personal level, he describes his elevation to CEO as ‘an exciting opportunity’.

I think particularly for somebody who’s been in the business for a while, and being in a business that I love, this is a fantastic opportunity. It’s been really busy though!

Angelo Swartz, Group CEO – Spar SA

He confirms that Spar has been given some breathing room in terms of repaying its debt by accommodating banks.

The majority of our debt, and almost all of our long-term debt, is euro-denominated and serviced in local currency. As you point out, our Irish business sits on a bit of debt which they service locally… so does our Swiss business. The Polish business has been a bit more of a challenge.

Angelo Swartz, Group CEO – Spar SA

RELATED: Spar to exit Poland, while botched local SAP project costs it R1.4 billion

We had some debt coming due towards the middle of next year and we’ve been supported by the banks who’ve all agreed to move those arrangements around so that we can find space to restructure our balance sheet.

Angelo Swartz, Group CEO – Spar SA

It’s certainly a challenging time and it’s been a tough year, but I think we feel like we’ve made a lot of the hard decisions we needed to in the last few months to set ourselves up for success. And as tough as things are, we still generated a huge amount of cash through our operations which is obviously a big positive and something that we can lean on going forward.

Angelo Swartz, Group CEO – Spar SA

Listen to the illuminating conversation with Swartz at the top of the article

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