COMPANY COMMENT: Bad news for SA will burnish Spar results
The unexpected relative strength of the rand in the past 12 months hasn’t been much benefit to recent results
The Spar share price has performed remarkably well in the past week, gaining more than 13% despite the release of rather unexciting results for the year to end-September. Perhaps investors are enticed by its strong rand hedge status.Given the unexpected relative strength of the rand in the past 12 months or so, this hasn’t been much benefit to recent results. Remarkably, the euro was down by about 10% over Spar’s financial 2017. But if, as is expected, SA is hit with ratings downgrades this week then anything with even a slight hue of rand hedge status is sure to attract a considerable premium. This expectation might be why the board decided to move its global expansion plans beyond the obvious — the northern hemisphere — to Sri Lanka. There are plans to open the first store there in March 2018. Southern Africa still dominates the group’s store profile with more than 2,000 stores, then Ireland with 1,050 and Switzerland with 300. Southern Africa also dominates turnover in rand terms...
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