SPAR SA reports strong FY growth

Date : 15 November 2019

South Africa-based SPAR Group, which operates across four countries, its home market, Ireland, Switzerland and Poland, reported its turnover rose 8.4% to ZAR109.5 bn (US$7.3 bn) in its financial year ending 30 September. It said its operating profit increased by 7.2% to ZAR3.0 bn (US$200.8m), helped by ‘focused margin management and tight cost and efficiency control’.

Good growth in South Africa

In South Africa, SPAR Group said its wholesale turnover for food and liquor increased by 8.1%, while its core SPAR business enjoyed turnover growth of 7.0% to ZAR57.6 bn (US$3.9 bn). It highlighted the strength of the TOPS liquor brand, which saw wholesale sales growth of 17.6%. Finally, the group noted that it had opened 169 new stores during the year, to reach a total network of 2,349, while it had completed 298 store upgrades across all its brands.

SPAR highlighted the strength of its private label ranges and their importance in driving footfall. The company said that the sales of its private label range rose by 10.1% to ZAR13.4 bn (US$900.7m), which meant that they accounted for 23.3% of total wholesale turnover. Discussing the ranges, SPAR said they offered ‘real consumer value and quality and remain a shopping differentiator for our retailers’.

BWG enjoys strong performance

In Ireland and south west England, SPAR Group said the BWG Group ‘reported a strong financial performance’, with turnover in local currency terms rising by 6.2% to €1.5 bn (US$1.7 bn) and by 2.2% in comparable terms. It said the growth was underpinned by acquisitions, while all its ‘retail brands reported positive sales growth’ and its Foodservice business saw ‘impressive double-digit turnover growth’. BWG added 60 new stores to reach a network of 1,360 stores.

SPAR Switzerland aided by retailer-owned stores

SPAR Switzerland enjoyed wholesale turnover growth of 1.2% in local currency terms, to ZAR10.4 bn (US$699.1m). It said the performance was aided by the ‘strong trading from upgraded retailer-owned stores’. It noted that the market ‘remained challenging’, but that it had seen an improved performance in the second half of the year, after implementing deep price cuts in the first half of the year. It added 26 new stores, reaching a network of 322 at the end of the financial year.

Outlook remains cloudy in key markets

For both its operations in South Africa and BWG, SPAR Group noted the outlook for the markets in which they operate remained challenging and were likely to continue to do so into 2020. It noted that for its home market, ‘all indicators continue to suggest that consumers will remain under financial pressure’. For BWG, the continued specter of Brexit hung over its operations. Despite this, SPAR said the ‘management team remains cautiously optimistic’.