Spar Group reports double digit growth in full year profit to US$187m

SOUTH AFRICA – The Spar Group, a South African retail chain has reported double digit profit growth of 12.9% before tax to R2.8 billion (US$187.1m) for the full year ended September 2019.

The listed retailer saw an 8.4% jump in revenue to R109.5 billion (US$7.3bn) with operating profits up 7.2% to R3.0 billion (US$200.4m) despite the tough operating conditions.

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The group is a warehousing and distribution business in South Africa that owns the Spar retail brand and supports the network of independent businesses that operate under the brand in the country.

It forms part of Spar International, which has operations in over 44 countries. The local arm, operating as the Spar Group Ltd, manages operations in Southern Africa, Ireland, Switzerland and Poland.

Spar Southern Africa delivered solid growth of 8.0% in wholesale turnover while its core business grew turnover by 7.0% to R57.6 billion (US$3.8bn). This was supported by strong marketing initiatives which continued to attract cash-strapped consumers.

Local turnover also got a boost from strong growth of almost 17.6% in wholesale liquor sales of its Tops liquor brand.

Spar’s Southern Africa store network increased to 2,349 stores, with 169 new stores opened and completed 298 store upgrades across all brands during the period under review.

Its Total private-label products wholesale sales reported in 2019 increased by 10.1% to R13.4 billion (US$895m). This represents 23.3% of all Spar wholesale turnover.

Prices at its local stores rose by 3.1% over the past year – compared to only 1.4% in the previous year.

Its Irish business grew turnover in 6% in euro, while SPAR Switzerland saw a decline of 1.5% in sales in the local currency.

The Irish outlook continues to be influenced by Brexit concerns; however, the group remains cautiously optimistic in both the Irish and South West England regions.

The Swiss business remains confident that the identified strategic initiatives to improve the turnover performance are gaining momentum.

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