Liquor and drugs boost Spar's sales
By Robert Laing - Nov 15th 2018, 15:07
Ireland was JSE-listed Spar’s best performing region, helping to offset sales and profit declines in Switzerland.
The Southern African division of retail multinational Spar expanded geographically by acquiring 80% of Ireland’s BWG Group for €55m (about R800m) in 2014 and 60% of Spar Switzerland for Sf44.5m (about R690m) in 2016.
The group reported its overall turnover grew 6% to R103bn in the year to end-September.
Its 2,236 stores in Southern Africa contributed 67% of the group’s turnover and 75% of its pretax profit. Revenue in its home market grew 6.7%, but pretax profit declined 4.8%.
Ireland, where Spar ended the reporting period with 1,371 stores, contributed 22% of both turnover and pre-tax profit. Its Irish division grew turnover 9.6% and pretax profit by 15.5%.
Its 315 stores in Switzerland remain a headache, with sales declining 5.3% and pretax profit down by 10.4%.
Swiss retailers suffer as the country does not use the euro and many of their customers have easy access to cheaper shops in neighbouring countries.
A slight appreciation of the Swiss franc against the euro “has been insufficient to slow the attraction of cross-border shopping that exists in Switzerland”, Spar CEO Graham O’Connor said in the results statement.
Regarding SA, O’Connor said the results were “positively boosted by strong liquor turnover growth of 13% and a very pleasing increase in the building materials business of 7.5%”.
The group expanded its flagship Spar store network in Southern Africa by 34 stores, taking the total to 937 at September 30.
“Combined food and liquor wholesale turnover growth was recorded at 5% and needs to be viewed against internally calculated food inflation of 1.4% This inflation measure has continued to decline from the 1.9% measured at half year and the 6% reported in 2017,” O’Connor said.
The group’s Tops liquor store chain grew sales 11.3% to R11.2bn during the 2018 financial year. The group grew its Tops chain by 41 outlets, taking the total to 774.
Spar moved into pharmaceutical market dominated by Clicks and Dis-Chem by acquiring S Buys in October 2017.
“The S Buys Group reported turnover of R929m for the period, which amounted to a pleasing growth of 13.4%. This performance was driven by impressive increases of 17.1% in the Scriptwise business — catering for high-value speciality scripts — and 11.7% in wholesale sales, which were largely attributed to increased procurement by Spar pharmacies,” the results statement said.
“The profitability of the business was, however, impacted by a lower-than-expected government regulated price increase of 1.3% compared to the 7% in 2017.”
Despite reporting flat net profit of R1.8bn, Spar raised its final dividend to R4.59, taking its total for the 2018 financial year to R7.29, an 8% increase on the previous year’s R6.75.Business Live
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