SPAR Group makes good progress on key priorities

The SPAR Group, which reported results for the six months ended March 2024 today, continues to make good progress in terms of its key priorities.

Total turnover for continuing operations, excluding SPAR Poland, increased 7.9% to R77.2 billion in the six months ended March 2024.

The Group also reached a significant milestone in signing key salient terms with a party to purchase the SPAR Poland operations. The interested party has expressed their commitment to continue operating the SPAR brand in Poland.

Angelo Swartz, Group CEO says “We have made significant progress in respect of the priorities for the Group. This includes staying on track with our timeline to dispose of the Group’s interests in SPAR Poland and we expect to have finalised this process by September this year. We have been focused on achieving the best possible outcome for all stakeholders”.

Commenting on the result, Swartz said, “While the trading performance has been mixed, we are pleased to report that the Group delivered an increased operating profit of R1.6 billion for our continuing operations consisting of SPAR Southern Africa, BWG Group in Ireland and South West England, and SPAR Switzerland. The continuing operations generated cash of R1.4 billion for the period, an increase of more than 50% against the same period last year, with a reduction in net debt year-on-year.”

SPAR Southern Africa delivered strong grocery retail sales performance of 7.1% and excellent growth of 13.5% for its liquor business, TOPS at SPAR. Swartz says, “Although SPAR is a wholesale business, retail sales are a better representation for industry comparison than wholesale. A resilient retail performance is indicative of the strength and relevance of the SPAR brand, and we are confident that our retailers remain at the heart of the communities they serve.”

Sales from SPAR’s Southern Africa private label business increased by 7.6%, with the offering now being tiered to match consumer’s budgets, against the backdrop of a persistent high-inflationary environment.

In South Africa, SPAR’s on-demand shopping offering app, SPAR2U, was available in 420 sites at the end of March 2024, up from 356 sites in September 2023. On demand sales volumes for the six-month period led to a stellar increase of 463% versus the same period in the prior year.

In other highlights, the pharmaceutical business, S Buys Pharmacy at SPAR, continued to deliver double-digit sales growth of 15.0%. While Build it delivered a marginal positive uptick in trading reflecting the subdued construction industry, it continues to hold its position as the number one building materials retailer in South Africa.

Turning to SPAR’s continuing operations in Europe, Swartz says, “BWG Group in Ireland and South West England delivered a solid trading performance despite challenging business environments in both markets. Supported by improved gross profit margin management and cost-saving initiatives, SPAR Switzerland delivered strong profitability against the prior comparative period, reporting an increase in operating profit of 9.9% in local currency.”

Swartz concluded by saying, “The significant changes made at Group executive and Board levels continue to drive a new strategic era in terms of how things are done at SPAR. There is a new wave of energy across the business, focused on shifting the culture towards executing at speed with greater accountability. We believe this shift will enable the business to compete more effectively by offering enhanced support to SPAR’s independent retailers so that our retailers can focus on what they do best – winning the hearts of the customers within the communities they serve.”

SPAR’s share price has taken a battering slipping from a high of just under R120.00 on October 2023 to R98.99 today, 12 June 2024. Although the trendline has once again turned positive.