Spar sees big jump in profit as consumers turn to store labels and alcohol
Business Tech - Nov 13th, 11:43
Listed retailer Spar has published its financial results for the full year ended September 2019, reporting an 8.4% jump in revenue, with operating profits up 7.2% despite tough conditions across its operations.
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, and includes brands such as Spar (Superspar, Kwikspar, etc), Tops at Spar, BuildIt and S Buys.
Turnover increased by 8.4% to R109.5 billion
Operating profit increased by 7.2% to R3.0 billion
Profit before tax increased by 12.9% year-on-year to R2.8 billion
Diluted headline earnings per share increased by 9.9% to 1160.6 cents per share on a normalised basis
The group declared a gross final cash dividend of 516 cents per share.
South African operations
Spar Southern Africa delivered solid growth of 8.0% in wholesale turnover in what the group described as “a competitive environment”.
The core Spar business grew turnover by 7.0% to R57.6 billion and was again supported by strong marketing initiatives which continued to attract cash-strapped consumers.
The Tops liquor brand again delivered an impressive result with wholesale sales growth of 17.6%.
Combined food and liquor wholesale turnover growth recorded growth of 8.1%, and despite a generally weak building materials sector, Build It increased sales by 6.9% to R8.0 billion, underpinned by effective marketing and improved retailer loyalty, the group said.
Spar’s Southern Africa store network increased to 2,349 stores, with 169 new stores opened. The group completed 298 (2018: 276) store upgrades across all brands.
Of particular note, the group said, was the strength of its Spar-branded private-label products, which it said continued to “offer real consumer value and quality and remain a shopping differentiator for our retailers”.
“Total private-label wholesale sales reported in 2019 increased by 10.1% to R13.4 billion. This represents 23.3% of all Spar wholesale turnover, meaning that almost one in four turnover rands is spent on a private label product,” the group said.
Despite its growth, and in particular boost in alcohol sales, Spar said that the prospects in South Africa remain constrained.
“In Southern Africa, all indicators continue to suggest that consumers will remain under financial pressure. Confidence is expected to remain unchanged in the medium term and this will add further pressure to a constrained spending outlook,” it said.
However, it said that it will continue to focus on its distribution capabilities and brands to ensure that independent retailers remain suitably positioned to deliver value to consumers.
In early trade on Wednesday, Spar’s shares were up 1% on the JSE, trading at R200.Business Tech
Checkers brings world-class retail to Constantia with new flagship store
27/11/2019 - 13:01
Checkers has opened the doors to its state-of-the-art 2 330 m² flagship supermarket at the Constantia Emporium as the retailer continues to take innovation to new heights.
Woolworths carves out market share in SA
27/11/2019 - 10:11
In Australia, David Jones's sales declined 2.1%, with the company saying a store refurbishment contributed to the decline.
Push and pull strategies work together to keep consumers coming back for more
26/11/2019 - 10:20
The retail sector is under increasing pressure as consumers have shrinking disposable income in a strained economy. Maintaining share of wallet is critical. Relying solely on a push route to market strategy from manufacturers into retailers is not enough to get consumers buying products. A pull strategy needs to coexist with the push to drive brand consumption. Integrating these strategies requires intelligent and insightful decision-making. This, in turn, requires data generated through smart technology which provides line of sight across the value chain from manufacturer to distribution, retailer to the consumer.
Exclusive leases must fall: Commission cracks whip on Shoprite, Pick n pay, Spar, Woolies
26/11/2019 - 09:57
The Competition Commission Inquiry into Grocery Retail, published on Monday, called for an end to the exclusive leases negotiated by national retail chains in all shopping malls across the country in a bid to open up access to markets for smaller players.
Tiger Brands still reeling from listeriosis aftershock
26/11/2019 - 09:41
Tiger Brands continued to feel the effects of the listeriosis outbreak in the year to the end of September after the food producer suffered an impairment charge in its value-added meat products (Vamp), following a slower-than-anticipated recovery in the division.