While Spar is witnessing performance improvements in its upgraded SAP enterprise resource planning (ERP) system, the botched implementation is still impacting its financial performance.
This emerged when the retail chain yesterday issued a trading statement for the year ended 30 September, as it is in the process of finalising its financial results for the period.
According to JSE requirements, listed companies are required to publish a trading statement as soon as they are satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported on will differ by at least 20% from those of the previous corresponding period.
The retailer lists the botched SAP system as one of the factors that impacted earnings from continuing operations during the current reporting period.
In a statement, Spar says the ongoing IT system issues at the KwaZulu-Natal (KZN) distribution centre (as previously guided) impacted gross margin, which negatively affected the profitability of the Southern African segment.
However, it notes that system enhancements activated in the later part of the second half of the financial year have been positive, reflecting some improvements in service levels and trading margins, which are expected to continue in the 2025 financial year.
In September, Spar said it was making progress in restoring the bungled SAP ERP implementation that cost the company R1.6 billion.
This, after in November last year, the JSE-listed Spar said the unsuccessful launch of a new ERP IT system (SAP) at the KZN distribution centre severely impacted its KZN trading performance, causing a loss of group turnover estimated at R1.6 billion.
According to the retailer, the operational impact amounted to an estimated R720 million in loss of profit for this region.
“As a result of the change in approach towards the SAP implementation rollout for the foreign regions, a write-off of R94 million in respect of the SAP ‘asset under construction’ has been recognised,” the group said.
Meanwhile, in the trading update, Spar says consumers continued to be constrained across its various territories, resulting in lower turnover growth in the second half of the financial year.
Despite inflationary pressures, it adds, operating costs were well-managed across the group.
Notwithstanding the negative impact of high interest rates on the group’s finance costs, group net debt reduced by R2 billion, from R11.1 billion to R9.1 billion.
On a continuing operations basis, the net debt/earnings before interest, depreciation and amortisation ratio improved to 2.44 times as at 30 September, from 3.07 times as at 31 March.
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