Competition is heating up in the SA grocery aisle as the effects of higher inflation and higher interest can be seen in the latest earnings results.
The SPAR Group’s latest earnings report was on fire, not in a positive way; the grocer missed its full-year profit target, with its European businesses also left out in the cold. The focal point of the earrings was that the group slashed its dividend by half, which sent investors over the edge and, quickly after that, sent the JSE share tumbling lower.
Technical
The share price decreased sharply after the earnings announcement, bringing the 14019c support level into focus. There is a possibility of a rebound from the support level back to the 15987c share resistance level if it supports the fundamental outlook. If we see the price move lower and start to breach the significant14019c support, we could expect more downside as short sellers move the price lower to the 12937c support.
Summary
The bull case for Spar could be a rebound from the significant support level of around 14000c per share to the resistance level of 15987c. The bears will look at the 14000c support for opportunities lower to the next support at 12937c a share as the JSE retail sector remains under pressure.
Sources: Trive South Africa, TradingView, The SPAR Group Ltd.
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