The Spar Group reports growth with strategic refocus
In a trading update for the 47 weeks to 23 August 2024, The Spar Group confirmed that the sale of its Polish division was well underway and awaiting regulatory approval.
It also reported positive progress on its IT solution to improve procurement, while a debt restructure will be completed by end 2024. A two-year plan to reshape its balance sheet is also comfortably on track, while a strategic review of the Swiss business division has been completed.
The Spar Group CEO, Angelo Swartz, said that supermarket and liquor retail growth “remains resilient”.
“Strong cost discipline across the broader business is helping offset softer sales in certain divisions like wholesale,” said Swartz.
Areas showing the most upside included Pharmacy at Spar, which grew 15%.
“That level of performance is exceptionally strong in current market conditions,” said Swartz.
The liquor division saw an 11% improvement at wholesale level, while Build it was showing signs of recovery.
“We saw a welcome upturn in Build it sales in the last month as the two pot retirement withdrawal system starts kicking in and interest rates start trending down,” said Swartz.
“While customers seem to slowly be enjoying more disposable income, we continue to focus on delivering everyday value and low prices for our shoppers”.
Group turnover from continuing operations increased by 4.1% in the trading period. In Southern Africa, total sales grew by 3.5%, reflecting varied performances across the business units.
A focus on South African business operations
“Our focus remains on returning the SA business to a 3% operating profit margin by the end of the 2026 financial year and we are in the process of reviewing our target operating model with a view to maximising value,” said Swartz.
“The Spar brand is the second biggest grocery offering in South Africa, and remains the core of our operations and primary focus. We saw total retail growth to the end of August 2024 of 6.1% (5.7% like-for-like), showing the strength and resilience of the brand. We are optimistic about the months to come as we continue to grow our business while contributing to the transformation of the economy.”
Meanwhile, the Ireland and South West England business (BWG Group) saw turnover lifting 2.6% in euros and 7.0% in rand. In Switzerland, turnover declined by 5.8% in Swiss francs but saw an increase of 0.8% in rands.
Swartz said: “We continue to assess our Swiss business and how it is positioned in the market to ensure we optimise returns.”
“The review of our European portfolio is well underway, and it is management’s intention to accelerate decision making in this regard over the coming months,” Swartz added.
In Poland, turnover declined by 6.5% in zloty terms but increased by 3.7% in rand terms.
“This local currency decline was primarily due to the loss of a net 13 retailers and a slight reduction in retailer loyalty following the Group’s announcement of its intention to divest from the Polish market,” explained Swartz.
“We have made significant strides over the past few months in future-proofing our business. While there is still work to do, our community of retailers has kept us on track. The success of our member stores is our success, and we remain focused on positioning ourselves as the first-choice brand in the communities we serve.”
