Spar group registers decline in full year profits despite 7% rise in turn-over

SOUTH AFRICA – South African retailer with operations abroad, Spar, has delivered a resilient group performance in the full year ended September 2022, despite various challenges across all regions.

Its group turnover increased by 6.0% to R135.6 billion (US$7.75 billion) and by 7.0% in constant currency.  However, its profitability continued to be impacted, registering a 2.9% drop in its headline earnings per share to 1 159.1 cents per share.

The group delivered an operating profit of R3.4 billion (US$194.3M), increasing by 1.1%, predominantly caused by the decline in profitability in Southern Africa due to rising operating expenses, which rose by 8.5% at group level.

“Group profitability continued to be impacted by the consequences of the pandemic in the first half of this financial year and new geopolitical circumstances which has seen all regions experiencing fuel and energy cost pressures,” the retailer said.

Its Southern Africa operations contributed 65.0% of turnover for the group and delivered strong growth in wholesale turnover of 8.4% to R88.1 billion (US$5 billion).

This increase was assisted by an improved core grocery business performance which generated an increase in sales of 5.3%.

Meanwhile its liquor business, TOPS at SPAR delivered excellent sales growth of 42.6%, rebounding strongly and reaffirming its position as the number one liquor brand in South Africa.

The retailers’ operations in Ireland and South West England under BWG, delivered an exceptional performance despite many challenges, with turnover growth of 7.6% in EUR denominated currency.

BWG Foods in Ireland reported an impressive year of new store openings, and neighbourhood stores have largely retained the gains made during the pandemic.

SPAR Switzerland on the other hand experienced extraordinary levels of neighbourhood support during the pandemic.

As restrictions eased, consumers returned to large supermarkets. Consequently, SPAR convenience stores have seen a retraction in the gains made during the pandemic with turnover declining by 3.0% in CHF denominated currency, however turnover is 14.4% higher than pre-pandemic levels.

Spar Poland delivered turnover growth of 8.2% with a key area of focus for 2022 was to address the retailer loyalty after 58 retailers elected to leave the group on July 1. Operating losses for this region reduced by 9.5% in local currency terms.

In other related news, food retailer Woolworths expects half-year earnings to rise more than 20% year-on-year as customers return to its stores, particularly in Australia, following prolonged pandemic lockdowns.

In a Sens announcement, Woolworths said headline earnings per share, the main profit measure in South Africa, was expected to rise by more than 33.6 cents in the six months ended Dec. 25, from last year’s 168.2 cents.

The group’s turnover and concession sales for the 20 weeks ended Nov. 13 increased by 23.3% on the same period last year, as all its businesses grew sales.

Its food business grew turnover and concession sales by 7.3%, despite disruption from rolling power cuts.

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