Spar reports single-digit sales growth

JSE-listed grocery chain Spar has reported single-digit sales growth of 7.8% for the 18 weeks to 28 January, despite muted growth in its liquor retail business – its typical star performer.

Spar’s combined core grocery and liquor turnover rose 8.5%, with the grocery wholesale business climbing 9.7% and Spar Tops liquor sales, increasing by a flat 1.6%, the retailer said in a trading update on Tuesday.

After initially falling in early trade, the share was up 0.51% to R144.98 by midday.

In its core Southern African operations, total sales increased by 7.4%, but they experienced headwinds in the form of inflationary pressures as well as increasing load shedding.

“The business has made good progress with its accelerated growth plan. This business continues to be impacted by fuel, energy and other inflationary cost pressures, but has benefitted from the installation of solar plants across all its distribution centres,” Spar said.

Sales performance in Tops liquor was affected by high levels of sales in the comparative period, when Covid-19 related alcohol prohibitions were stopped in 2021, and the segment saw 55% growth, Spar said.

“Comparing the last month of the period, January 2023 against January 2022, liquor turnover increased by 10%” it said.

British boost

The group’s S Buys pharmaceutical business and BWG based in Ireland and South West England, saw the biggest growth, with sales jumping 18.1% and 11.1% respectively.

It said BWG was boosted by strong performances from its Irish business across all retail brands and a full recovery in the hospitality sector which was restricted in December 2021 following [an outbreak] of the new Covid-19 variant.

“The Appleby Westward group in South West England recorded solid growth by both the wholesale business and corporate retail division. Operating costs continue to be impacted by higher distribution and labour costs across both markets,” the group said.

In Switzerland, turnover declined by 3.8% (but increased by 4.4% in rand terms), due to the transfer of some corporate stores to independent retailers over 2022. The Swiss stores were also affected by strained consumers looking for cheaper alternatives in neighbouring countries.

“However, with higher inflationary pressures across the border and increased fuel prices, the price benefit of shopping abroad has been eroded. During the period, energy cost pressures persisted in this region,” Spar added.

In Poland, where consumers contend with double-digit food inflation, turnover rose 4.6% both in Polish zloty and in rand terms.

Corporate governance

The retail group has been battling a series of corporate governance issues in South Africa, recently conceding that ‘fictitious’ and ‘fraudulent’ loans flagged by its auditors and lawyers, were reportable irregularities.

Read:
Fictitious and fraudulent loans a ‘reportable irregularity’ – Spar
Spar appoints Mike Bosman as interim CEO
Listen/read: Exec moves: Spar chair steps in as interim CEO, Tongaat CEO to exit

CEO Brett Botten and chair Graham O’Connor retired and resigned, respectively, in the past two months, over allegations of accounting irregularities.

Newly installed chairman Mike Bosman is serving as the interim CEO and the retailer’s board says it has implemented additional processes, including setting up a chairman’s committee led by lead independent director and chair of its audit committee Andrew Waller.