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Retail

Spar South Africa Reports Strong Sales Growth, Despite Swiss Slowdown

Spar Group (South Africa) has reported a 12.6% increase in half-year sales, to R47.4 billion, with its Southern African operation seeing growth of 4.9%.

Profit before tax at the group was up 7.8% for the period, to R1.2 billion, as a result of a net-interest income of R2.5 million, compared to a net-interest expense for the corresponding period last year.

European Business

Close to a third (31.4%) of the group's turnover is generated in foreign currency, most notably by its Spar Switzerland and BWG Group (Ireland) businesses, which posted differing performances over the period.

Spar Switzerland incurred an operating loss of R8.3 million, the group said, largely due to 'to the declining sales performance which impacted all divisions, and the disappointing trading performance of the corporate retail stores'. A pension cost adjustment also impacted its performance. Spar Switzerland joined Spar Group in April 2016.

In Ireland, where the BWG Group business includes the Spar, Mace, Londis and XL banners, the business reported growth of 1.6% for the period, however, this was impacted by a 'significant slow-down in second-quarter growth across all customer categories', including a 2.6% decline in non-alcoholic drink sales and a 5.2% decline in alcohol sales.

Outlook

Looking ahead, Spar Group believes that the trading environment for the coming year in South Africa will be 'tough', particularly with 'the political uncertainty undermining consumer and business confidence'.

In Europe, a new management team at Spar Switzerland, led by the former managing director of Spar's KwaZulu-Natal region, will be 'tasked with addressing issues in the retail environment, and the group recognises that this will take some time to achieve'.

In Ireland, meanwhile, the outlook for BWG Group is 'cautious, largely influenced by the Brexit uncertainties'.

© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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