The SPAR Group saw a “welcome upturn” in Build it sales in the past month, as two-pot pension payouts and lower interest rates started to take effect. File Photo: IOL
The SPAR Group is achieving growth in key segments while a two-year plan to reshape its balance sheet is on track, the grocery franchise store chain said on Monday.
The SPAR Group said in a trading update that for the 47 weeks to August 23, they had seen a “welcome upturn in Build it sales in the last month, as the two-pot retirement withdrawal system started kicking in and interest rates start trending down”.
“While customers seem to slowly be enjoying more disposable income, we continue to focus on delivering everyday value and low prices for our shoppers,” said SPAR Group CEO Angelo Swartz. He said the sale of its Polish division was well under way and awaiting regulatory approval.
The group also reported positive progress on its IT solution to improve procurement, while a debt restructure was anticipated to be completed by end 2024.
“We have made significant strides over the past few months in future-proofing our business. While there is still work to do, our community of retailers has kept us on track. The success of our member stores is our success, and we remain focused on positioning ourselves as the first-choice brand in the communities we serve,” he said.
He said supermarket and liquor retail growth “remains resilient”. Cost discipline was helping to offset softer sales in certain divisions like wholesale.
Areas showing the most upside included Pharmacy at SPAR, which grew 15%, which was a strong performance in current market conditions, said Swartz.
The liquor division saw an 11% improvement at wholesale level, while Build it was showing signs of recovery.
Turnover from continuing operations increased by 4.1% in the trading period. In southern Africa, total sales grew by 3.5%, reflecting varied performances across the business units.
“Our focus remains on returning the SA business to a 3% operating profit margin by the end of the 2026 financial year and we are in the process of reviewing our target operating model with a view to maximising value,” said Swartz.
He said the SPAR brand was the second-biggest grocery offering in South Africa, and remained the core of their operations and primary focus.
“We saw total retail growth to the end of August 2024 of 6.1% (5.7% like-for-like), showing the strength and resilience of the brand. We are optimistic about the months to come as we continue to grow our business while helping to transform the economy,” he said.
Meanwhile, the Ireland and South West England business (BWG Group) saw turnover lift 2.6% in euros and 7% in rand. In Switzerland, turnover declined by 5.8% in Swiss francs, but increased 0.8% in rand.
“We continue to assess our Swiss business and how it is positioned in the market to ensure we optimise returns.”
“The review of the European portfolio is well under way, and it is management’s intention to accelerate decision-making in this regard over the coming months,” Swartz said.
In Poland, turnover declined 6.5% in zloty terms, but increased by 3.7% in rand.
The local currency decline was mainly due to the loss of 13 retailers and a slight reduction in retailer loyalty, following the group’s announcement of its intention to divest from the Polish market.
*SPAR Group has, according to reports yesterday, suspended distribution in South Africa of Top Score vanilla-flavoured instant maize porridge after claims that three children died after consuming the product on Friday night in the Eastern Cape.
BUSINESS REPORT
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