Spar interim earnings up 20.5%

An interim dividend of 122c per share was declared.

The group said turnover was 24.4% higher at R16,25-billion, while operating profit grew 21.9% to R605,1-million.

The group said it continued to perform well in the first half despite tight economic conditions and a competitive retail trading environment.

Growth at existing stores, new store openings, aggressive promotional activity and the impact of inflation resulted in the group's turnover increasing by 24.5%.

Spar retail outlets continued to trade strongly and the group gained further market share.

Thirty-four new stores opened during the period and retail trading space increased by 4.4%. At end March 2009 the group serviced 239 SuperSpar, 460 Spar and 147 KwikSpar stores.

TOPS at Spar liquor outlets grew market share with 46 stores being opened.

Organic growth at existing stores was a healthy 14%.

Trading remains buoyant and turnover ex-distribution centres increased in excess of 36%. Further store openings are scheduled for the balance of the year, Spar said.

Build It was affected by the economic slowdown and turnover growth at retail was correspondingly lower.

The supply of critically important cement again became a problem in some areas, which adversely affected retailers' sales performance.

Eleven new stores were opened during the six months. Turnover to Build It outlets increased by 21.2%.

The group's South Rand distribution centre has taken occupation of its expanded dry goods facility and the upgrade of its perishable facility is progressing according to schedule.

Final handover of the facility remains October 2009. Construction of a new perishable facility in Mount Edgecombe, KwaZulu-Natal is progressing according to timetable and budget.

Scheduled handover of the facility is September 2009 with deliveries commencing from this operation shortly thereafter.

With the group's new Western Cape distribution centre fully operational, the supply of goods to Spar retailers in Namibia has been transferred from the group's North Rand facility to the Western Cape.

This move will provide the Western Cape operation with increased flow through and economies of scale, whilst at the same time easing the volume pressure on the North Rand facility.

Looking ahead, the group said reduced economic activity and the likelihood of declining inflation will result in lower turnover growth for the balance of the financial year. This will, however, be countered by further new store openings and ongoing marketing activity.

Spar Group is confident that it will produce a satisfactory level of revenue and profit growth for the remainder of 2009, it said.

Published courtesy of