Spar records 7% sales growth in SA, despite pressurised consumers

26 Mar 2024 | Moneyweb

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South Africa’s second-biggest supermarket retailer, Spar Group, reported an 8.8% increase in turnover for the 24 weeks ended 15 March 2024.

In a voluntary trading update issued on Tuesday, the retailer said there was strong sales growth in the South African market, where retail sales jumped 7.1%. Its Build It division showed growth of 1.1%, while TOPS and the pharmacy business achieved sales growth of 12.8% and 17.7%, respectively.

Spar’s operations in Europe, however, faced challenges:

In Ireland, through the BWG Group, turnover increased 6.6% in euro terms. However, there were pressures from inflation, high interest rates, and a 12.4% increase to the minimum wage, taking effect from 1 January 2024.
In the UK, expectations for economic growth remain uncertain, and trading conditions have been particularly challenging due to the seasonal nature of business located in an area influenced by holidaymakers.
As for operations in Switzerland, the group recorded a decline in turnover of 4.7% in Swiss francs. The drop in turnover is ascribed to a shift in consumer behaviour to cheaper products in local supermarkets.
In Poland, turnover decreased by 4.2% in the Polish monetary unit, the zloty, during the holiday period.

The group believes it will continue to face headwinds in all the markets it is currently operational.

Spar Group CEO Angelo Swartz said the retailer’s home market, South Africa, remains the heart of its business and is a key focus area. “While inflation is back within the South African Reserve Bank’s target range, 14-year-high interest rates, combined with muted GDP growth forecasts and high unemployment, will continue to place consumers under immense pressure. In response, we are focusing on delivering everyday value, low prices, and convenience to our shoppers,” he added.

Spar’s share price traded at R87.18 around mid-day, 0.19% weaker than the previous day.

(This story first appeared in Moneyweb)