The travails of food wholesaler Spar illustrate that no matter how quickly you think you’ve nipped a problem in the bud, chances are the rot goes way deeper.
Seven months ago, Spar waved goodbye to CEO Brett Botten and long-standing chair Graham O’Connor amid a raft of allegations of self-dealing and shoddy governance, including fictitious loans ostensibly made to franchisees years ago worth R11m.
In this context, it was perhaps no surprise that Spar last week announced a 30.3% decrease in earnings for the six months to March, as it put its dividend on ice. The company’s problems aren’t just in South Africa, but in Poland and Switzerland too, and it has now breached covenants on its considerable debt. Adding to Spar’s troubles is that implementation of its SAP system has been a disaster (when is it ever not?).
Given all Spar has been through, it’s no surprise that its share price has tumbled 25% in a year. Shareholders will be kicking themselves for not asking tougher questions about the retailer’s debt-fuelled expansion much earlier.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.