Spar Group grocery sales steady, building boost turnover growth

SPAR GROUP lifted sales 3.9 percent to R116.1 billion for the 48 weeks to August 27, boosted by strong sales at Build it, while Spar Southern Africa increased wholesale sales by 4.5 percent, the group said in a trading update yesterday.

The core Spar grocery business increased sales 0.5 percent – like-forlike sales increased by 0.2 percent, while internally measured price inflation slowed to 4.7 percent.

Liquor sales increased 12 percent despite trading restricted by lockdowns. Liquor sales increased 61 percent for the five months to August demonstrating the effect of the low base of the prior year.

A JSE analyst said: “We would agree that the recovery seen by Spar is in line with comments from various players that indicated the alcoholic drinks market started recovering faster than expected.

“Initial research earlier in the year indicated the market will take two years to recover and to see the same volumes as pre-Covid, but since restrictions eased and consumers strong relationship with their favourite alcoholic offerings remained strong, this recovery happened sooner than anticipated.”

Operations in Gauteng and KwaZulu-Natal were significantly affected by civil unrest in July.

Of 184 stores initially damaged or looted, 115 had reopened. Another 32 would reopen before the end of the calendar year.

Reopening the remaining 37 stores would be delayed due to the extent of the damage caused.

Build It sales increased by 27.6 percent, also positively affected by the closure of building material retail during the initial lockdown in 2020.

However, despite strong initial demand, building materials sales slowed in recent months, the group said.

BWG Foods, in Ireland and South West England, increased turnover 3.3 percent, supported by strong contributions from all retail brands and the corporate retail stores.

Spar Switzerland saw strong turnover grow 7.3 percent – both neighbourhood stores and the cash and carry business reported positive growth.

Spar Poland increased turnover by 17.5 percent even though pandemic-related challenges continued to hamper the progress of the business.

“Spar Southern Africa benefited from increased home consumption with consumers choosing local, convenient and community-based Spar stores during the initial hard lockdown in 2020“Consequently, the business has been impacted by the effect of the high base in the second half of the prior comparative period,” directors said.

They said the Swiss business experienced an “extraordinary performance”, largely due to a continued lockdown in that region. Consumers continued to support local retailers extensively during the period.

Spar’s share price fell 0.25 percent to close at R203.39 on the JSE yesterday.