Offshore assets of Spar have it harder in Europe

Spar’s offshore investments are faring worse outside Africa as it struggles in Switzerland and experiences marginal growth in its Irish business.

The wholesale retailer released a subdued earnings update for the 18 weeks to endJanuary with a 5.45% increase year on year, but minor growth in Ireland and a downturn in Switzerland.

Ireland wholesale and retail sales were up 0.7%, with the group saying Brexit concerns have led to a “challenging” consumer environment.

Spar reported that turnover at its Swiss business was down 1.9%, but that it had fared better than other listed retail operations in that country.

“Management remains satisfied that the implemented strategies in Switzerland will continue to show positive terms,” the company said.

Spar’s local building business, Build It, experienced a downturn, with a 3.1% sales drop, as struggling consumers stop buying building materials.

It said weaker spend overall by local consumers was reflected in sales only up 4.9%. If its product price inflation of 4.2% is taken into account and added to population growth, people are actually buying less or cheaper food per head, year on year.

Spar’s trading update showed its liquor sales under the Tops brand only increased 4.5%, which it called “somewhat disappointing”. By contrast, in its previous trading update, liquor sales had grown 17% year on year.

It said the muted growth was due to growing competition between retailers selling liquor. Shoprite opened its 500th bottle store in 2019.

Spar announced that it has completed its purchase of Polish retailer Piotr I Pawel and that debt-restricting activities are continuing. The Polish business consists of retail stores and wholesale businesses that provides stock to other franchises, similar to Spar’s SA business.