A Spar supermarket in Rossrüti, Switzerland
A Spar supermarket in Rossrüti, Switzerland

Retailer Spar is expanding into Poland in search of new revenue streams from one of Europe’s most dynamic economies. 

The Polish economy recorded real GDP growth of 5.1% in 2018 and unemployment fell to less than 4%, the World Bank has reported. The bank expects growth in the Eastern European country to remain robust on the back of private and government consumption.

Spar is buying a controlling interest in the Polish-based Piotr i Pawel Group, which runs 77 delicatessen and supermarket stores, with a wholesale distribution network.

The value of the deal, which is pending the approval of Polish competition authorities, was not disclosed. 

Spar CEO Graham O’Connor said he is excited to take the group into a fast-growing market.

Spar CEO Graham O'Connor discusses the group's interim financial performance

Spar’s plan to go into Poland follows its expansion into Ireland and Switzerland three years ago.

Argon equity analyst Bjorn Samuels wanted more details on the deal before passing judgment on it.

“Spar’s track record of offshore acquisitions has been a mixed bag with success in Ireland and underperformance in Switzerland, so the telling thing will be how much they pay and how quickly they plan to expand into the region,” Samuels said.

The scale of the transaction will not pose a danger if something goes wrong, he said.

“Fortunately, the proposed acquisition is for a small chain of 77 stores, which we believe would not have a material effect on the group’s numbers in the near term.”

Spar, which also operates in Southern Africa, said on Wednesday total turnover for the six months to March grew 8.6% to R54.3bn, despite “tough trading markets across all business geographies”.

It hiked its half-year payout to shareholders 5.2% on the back of “a strong performance” during the first half of its financial year.

Turnover from its Southern Africa operation grew 7.7% to R37.3bn and its operating profit increased to R1.09bn from R1.04bn.

The latest results coming out of Ireland and Switzerland were mixed. O’Connor said the performance of its Irish operations were better than expected, with turnover for this operation rising to R11.85bn from R10.48bn, and operating profit up to R270m from R225m for the six months to end-March.

Operating profit in its Swiss operation fell to R17.3m from R46.2m, despite turnover rising to R5.1bn from R4.83bn.

claasenl@businesslive.co.za