Resilient Performance: SPAR Group Limited Reports 9.3% Turnover Growth Amidst Challenging Conditions

  • SPAR Group Limited reports 9.3% turnover growth for 20 weeks ending February 16, 2024, amidst challenging market conditions.
  • Strong performance in Southern Africa and BWG Group, but declines noted in SPAR Switzerland and Poland.
  • Challenges with SAP implementation in KZN and ongoing negotiations for disposal of SPAR Poland interests.
Published by
Lethabo Ntsoane

The SPAR Group Limited has demonstrated resilience in its trading performance, with a commendable 9.3% increase in turnover for the 20 weeks ending February 16, 2024. Despite facing tough market conditions characterized by consumer-driven demands for greater value amidst inflationary pressures, SPAR’s diversified strategy has ensured a robust top-line growth.

Southern Africa Highlights

In Southern Africa, SPAR recorded a total wholesale sales growth of 5.6%. Although impacted by weaker-than-anticipated performance in the grocery sector, the combined core grocery and liquor turnover showed a growth of 6.1%. Notably, SPAR’s private label business showcased strong performance, while online food and liquor sales skyrocketed by an impressive 450% compared to the previous period. The pharmaceutical business also saw substantial growth, recording an 11.6% increase in turnover.

Southern Africa Turnover Growth (%)20 weeks ended February 16, 2024
Wholesale grocery business5.1
TOPS/Liquor sales12.7
Combined grocery and liquor6.1
Build it0.5
S Buys – pharmaceutical business11.6
Southern Africa5.6

BWG Group Performance

Across regions, the BWG Group in Ireland and South West England reported solid trading performance, with turnover increasing by 7.1% in EUR terms and an impressive 19.1% in ZAR terms.

Challenges Faced in Switzerland and Poland

However, SPAR Switzerland faced challenges with a decline in turnover of 5.7% in CHF terms. Nevertheless, in ZAR terms, there was a notable increase of 9.2%, attributed to consumer preferences shifting towards retailers offering competitive pricing. Similarly, SPAR Poland encountered a decrease in turnover by 2.9% in PLN terms, offset by a 16.1% increase in ZAR terms, influenced by a decline in retailer loyalty following the announcement of SPAR Group’s intention to sell its interests in the region.

SAP Implementation and SPAR Poland Disposal

The SPAR Group also provided updates on its SAP implementation, acknowledging disruptions in profitability due to sub-optimal system utilization. Measures are being taken to enhance the system’s functionality, particularly in demand prediction and availability management. Progress has been made in disposing of SPAR’s interests in Poland, with negotiations ongoing to secure the best possible outcome for stakeholders.

Financial Considerations and Future Outlook

In terms of financial structuring, the Group is exploring various debt options, closely tied to the outcome of the SPAR Poland disposal. The Group reassures shareholders that it has the full support of its financiers and does not plan to raise capital from shareholders. Interim financial results for the six months ending March 31, 2024, are expected to be published around June 5, 2024.

In conclusion, despite facing significant challenges in various markets, SPAR Group Limited remains steadfast in its commitment to navigating through the complexities of the retail landscape, driven by its resilient performance and strategic initiatives.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo