STOCK TAKE | Did Woolworths fleece Spar?

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OPINION

Woolworths fleeces Spar?

Spar spars over snacks and treats

It’s hard not to be suspicious about Woolworths' decision to release a trading update, for a 20-week period, the same day that Spar released its results (Wednesday). JSE companies report results at 26 and 52 weeks, roughly, but do need to flag earnings expectations if they are high or low enough. Also, hard to be too suspicious when speculating, lawyers insist.

But those looking for smoke may see some in how investors reacted to the two releases. Spar’s shares crashed almost 15% on disappointing dividend and earnings news, while Woolworths leapt almost 6%, and adding more than 3% on Thursday as well. Not baaad.

Of course, this is not to suggest Woolworths knew exactly what was in Spar’s report, but it may have had some idea, especially as it is also a grocer that shares certain markets. Spar is also in the midst of implementing a new enterprise resource planning system, a massive, and expensive undertaking, and therefore a risky one. Spar, of course, knows this, and recently appointed Ernst and Young to strengthen its IT audit functions for precisely this reason.

Woolworths' namesake in Australia, which is not connected to Woolworths SA, also struggled with its new system, and SA’s Woolworths may have noticed, perhaps when googling stuff.

But even if it didn’t, implementing such systems is already famously difficult, especially, it seems, for firms slinging food and booze.

Woolworths may also have got a sense it was eating Spar’s lunch if significantly more customers were eating theirs, but, it seems both have taken load shedding hits, and both are clearly in the fight for customers.

The news on Wednesday, in part, was that Woolworths' SA food business grew turnover 7.1% in the 4.60273 months to 13 November (5.1% in comparable store terms) Food inflation was 7.9%, but it kept its price moves to an average 6.3%.

Spar's internally measured inflation for food was 6.9% for its year to end-September, while turnover in its core SA grocery was "a robust" 5.3%, or 4.9% in comparable retail terms. Advertising and promotional costs jumped a fifth.

Of course, SA food is not the be-all and end-all of either firm's business, but they do share the JSE, and a limited pool of investors. Regardless of the motives, how nice of Woolworths to help out on the day, as some of Spar's shareholders looked for alternatives.


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Previously:

STOCK TAKE | Where did the Trustco trust go?

STOCK TAKE | Another SA firm burned in Australia and what the Post Office, Twitter have in common

STOCK TAKE | Will Gold Fields come up short?

STOCK TAKE | Chicken Licken eyes everyone's souls and Shoprite has fans in Singapore

STOCK TAKE | The Dis-Chem dodge - and will you be paying by cash, card or crypto?

STOCK TAKE | Discovery executives make bank

STOCK TAKE | Heineken keeps it green, Godongwana's careful words and SA's tax revolt odds

STOCK TAKE | In praise of SA's great worriers

STOCK TAKE | Eskom (sort of) stimulates business spending, while super yacht heads SA's way

STOCK TAKE | Telkom gets jilted and Markus 2.0

STOCK TAKE | The Dis-Chem drama - and Pick n Pay slump points to trouble ahead

STOCK TAKE | A tale of two smelters, and did banks get it wrong on home loans?

STOCK TAKE | Reserve Bank walks the hawk talk and Harmony re-emerges down under

STOCK TAKE | Allan Gray takes shine to Gold Fields - and Anglo's Kusile-sized generator

STOCK TAKE | Pick n Pay's big bet - and should you follow Gerrie?

STOCK TAKE | Is Sasol's hydrogen plan just hot air?

STOCK TAKE | Karooooo grows its Os and Ackerman states it like it is

STOCK TAKE | A German cure for SA labour woes - and what’s Schadenfreude in Swedish?

STOCK TAKE | Allan Gray takes shine to Gold Fields - and Anglo's Kusile-sized generator

STOCK TAKE | Telkom avoids signal loss amid the Rain - and the Woolies wage way

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