Spar profits from changes to shopper behaviour in South Africa

The Spar Group on Wednesday (18 November), reported a 13.5% increase in turnover for the the year ended September 2020, as consumers supported local and convenient retailers amid the Covid-19 pandemic, and resulting lockdown periods in its various markets.

The group is based in Southern Africa, Ireland, Switzerland and Poland.

Profitability was positively impacted by a change in sales mix as increased home consumption drove higher-margin grocery and fresh categories, it said. Group normalised diluted headline earnings per share increased by 8.8%, while the board declared a final dividend of 665 cents per share.

Headline earnings per share increased by 0.5% to 1 135 cents, and normalised diluted headline earnings per share increased by 8.8% to 1 262, it said.

Spar Southern Africa contributed growth in wholesale turnover of 5.8% to R78.6 billion. Core food business increased sales by 9.2%, supported by strong demand for groceries. During this period, internally measured wholesale food inflation has risen to 3.9%.

Spar Southern Africa turnover increased 5.8% to R78.6 billion, reflecting the impact of the sales restriction on liquor, cigarette, home meal replacement and building material categories during lockdown and selected continued trading restrictions on certain categories thereafter.

“Although we saw large volume increases for groceries and health and beauty categories, these volumes were largely offset by the loss of liquor and cigarette sales due to the trading ban on these categories.”

Combined food and liquor wholesale turnover growth was recorded at 6.2% and should be viewed against internally calculated food inflation of 3.9%, the retailer said. This inflation measure has decreased from 4.1% measured at half year and the 3.1% reported in 2019, it said.

Spar (core food business) saw wholesale turnover growth of 9.2% to R62.9 billion (2019: R57.6 billion), driven by changed patterns of consumer buying in favour of local, convenient and trusted retailers, as well as increased home consumption, brought on by the pandemic.

At a retail level, turnover increased 8.5% to R91.2 billion (2019: R84.1 billion) and recorded like-for-like retail sales growth of 7.3%.

House brands, including Spar private label products performed strongly. Private label wholesale sales increased 14.1% to R10.5 billion, representing 16.7% of core Spar turnover. Total turnover for all house brands increased 12.1% to R15 billion, representing almost 24% of core turnover.

The group said it remains focused on driving organic retail growth through store upgrades, which include the integration of successful in-store concepts such as Chicken Chikka deli counters.

 

Store numbers increased by 15 Spar stores across the various formats, raising the total store numbers to 975. TOPS at Spar has been severely impacted by the trading restrictions on the sale of liquor during and post the lockdown in South Africa. Wholesale turnover for this business declined by 15.8% to R6.4 billion (2019: 7.6 billion).

“Our retailers saw sales decline of 17.8% to R10.5 billion (2019: R12.8 billion), with like-for-like sales declining by 19.7%,” it said. During the period, the TOPS at Spar store network increased by 20 stores on a net basis to 842 stores, while 70 stores were revamped. Total retail space for this format increased by 3.6% (2019: 6.7%).

The Pharmacy at SPAR business developed 12 new stores during the year, increasing the total number of pharmacy stores to 132 stores. This business reported an increase in turnover of 3.6% to R1 072.8 million, the group said.


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Spar profits from changes to shopper behaviour in South Africa