Spar 47-week sales ‘weaker than expected’

Wholesale retailer the Spar Group says its sales performance has been weaker than expected, but it has made significant progress on its short-term priorities.

The group said in a statement on Monday that turnover from continuing operations for the 47 weeks to August 23 increased by 4.1%. Turnover was adversely affected by fluctuations in exchange rates and inflation.

Spar Southern Africa’s total sales grew by 3.5%, reflecting varied performances across the business units. Combined core grocery and liquor sales grew 3.6%, against internally measured price inflation of 5.8%, with liquor sales showing an exceptional performance of 10.5%.

Total retail growth to the end of August through Spar’s grocery and liquor stores was 6.1% (5.7% like for like).

Build it delivered a pleasing sales increase of 1.2%, marking a recovery after a decline in the first half. Retail sales in the Build it division have grown by 2.4% (like for like 3.1%) to end-August.

The pharmaceutical business, S Buys, continued its strong first-half performance with a 14.9% increase in turnover driven by increased loyalty and growth in Scriptwise.

BWG Group its unit in Ireland and Southwest England increased combined turnover for both markets by 2.6% in euro terms and 7% in rand terms.

In Ireland, BWG Foods delivered a solid performance with increased turnover while the Appleby Westward Group in the southwest of England experienced a decline in volumes, Spar said.

“Our Appleby business is highly seasonal and dependent on a good British summer, which was moderate this year. Our UK business is also feeling the effect of structural changes in the economy as a result of the full effects of Brexit,” it said.

Spar Switzerland’s turnover declined by 5.8% in Swiss francs but saw an increase of 0.8% in rand. The Swiss market remains challenging, with volume declines across the sector. “Our cash and carry business was most severely impacted as the market continues to favour cross border shopping and convenience shopping,” it said.

Spar continues to assess the Swiss business and how it is positioned in the market to ensure it optimises returns.

Spar Poland’s turnover declined by 6.5% in Polish currency terms but increased by 3.7% in rand.

“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,” it said.

The disposal of the Polish business is under way, with the sale and purchase agreement signed. Spar expects the transaction to be implemented in the coming months.

Spar has offloaded its loss-making operations in Poland to local retailer Specjal for R185m, marking the end of a costly venture that has drained the group’s resources since 2019.

The sale will see Spar settle the firm’s funding debt, amounting to an estimated R2.7bn.

The group said it viewed the disposal as a necessary step to restore confidence among investors and to remove a considerable financial burden from its balance sheet.

It said significant progress has been made in stabilising the ERP implementation at Spar’s KwaZulu-Natal distribution centre and it has implemented upgrades to allow procurement teams to have better visibility when making pricing decisions. Early indications are positive and normal margins should be achieved in the near term.

The group has begun to plan our rollout for the remaining distribution centres which should gain meaningful progress in the 2025 financial year.

The group continues to focus on returning the SA business to a 3% operating profit margin by end of the 2026 financial year.

The group will release its full-year results on November 26.

mackenziej@areana.africa