South African retailer and wholesaler Spar Group Ltd plans to open two more stores in Sri Lanka, it said on Wednesday, after warning that fuel price hikes and currency weakness could affect its home market.
In 2016, Spar entered into a 50/50 joint venture (JV) with Ceylon Biscuits Ltd in Sri Lanka, to establish Spar SL.
'Good Opportunities'
Spar SL opened its first store in a suburb of the capital, Colombo, in March, and chief executive Graham O'Connor told Reuters that two more stores would be opened by year end.
"[There is] strong growth, very little opposition, a very fragmented market, so very good opportunities," O'Connor said.
The two additional stores will be located in Colombo, trading under the Spar banner, group financial director Mark Godfrey added in an emailed response to questions.
Sri Lanka's economy is expected to grow between 5% and 5.5% this year, from an estimate of less than 4% in 2017, according to the country's central bank.
Fuel Price Increases
Back home, the group expects its core Southern African market to be held back by fuel price increases and foreign currency changes, meaning that 'consumers will remain under pressure, with a constrained spending outlook'.
Spar, which also has operations in Switzerland and Ireland, reported a 5.6% increase in first-half group sales, to 50 billion rand ($4 billion), boosted by its European operations.
Overall sales slowed from the 12.6% growth that the company reported a year earlier.
Sales in Southern Africa were impacted by low consumer spending due to weak economic growth and the world's largest-ever listeria outbreak, which forced retailers to remove cold meat products from their shelves. At least 200 people have died from listeria in South Africa since January 2017.
The company's headline earnings per share rose by 14%, to 541.2 cents. Headline earnings per share is the main profit measure in South Africa and strips out certain one-off items.
Spar shares, which had fallen by 2.4% over the past year, were up 2.68% at 10.04 GMT.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
