The Spar Group, yesterday flagged that the ban on alcohol sales and transportation hampered its performance during the 18 weeks to end January 29. Picture: Simphiwe Mbokazi
The Spar Group, yesterday flagged that the ban on alcohol sales and transportation hampered its performance during the 18 weeks to end January 29. Picture: Simphiwe Mbokazi

Spar shares fall despite the group’s positive trading update

By Sandile Mchunu Time of article published Feb 17, 2021

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ANOTHER South African retailer, the Spar Group, yesterday flagged that the ban on alcohol sales and transportation hampered its performance during the 18 weeks to end January 29.

Spar said its liquor sales fell after President Cyril Ramaphosa moved the country to level 3 of the national lockdown on December 28 to control the surge of Covid-19 infections.

The group saw its shares falling 6 percent on the JSE yesterday, despite a near double-digit growth in sales for the 18 weeks to end January 29. Spar said its sales increased 9.8 percent to R42.99 billion, but the performance was offset by a 17.9 percent decline in liquor sales during the period.

The latest slump in liquor sales is the second one to hit Spar. In the 48 weeks to end August last year, the group also reported a 16.4 percent decline in liquor sales when the country moved to level 5 of the national lockdown to contain the spread of the pandemic.

On Monday, the country and the continent's biggest retailer Shoprite said that the ban on liquor saw its Liquour-Shop record a 21.8 percent plunge.

Spar said yesterday that Tops, its liquor division, came under pressure because of lost sales during the period.

“The liquor business was heavily impacted by the closure of Tops at Spar retail stores during the period due to lockdown regulations banning the sale of alcohol and significantly reduced trading hours when the ban was lifted and wholesale liquor sales declined by 17.9 percent,” the group said.

Spar said that its building materials supplier, Build It, also parried off a difficult period, recording a 25.6 percent increase in sales as consumers concentrated their money on improving residential dwellings.

The Spar Southern Africa reported wholesale sales growth of 3.4 percent, which the group attributed to a weaker consumer spend and lost liquor business.

It said sales in its core grocery business increased 2.8 percent, with likefor-like sales increasing by 2.5 percent, with internally measured price inflation of 5.1 percent during the period.

The group has operations in Ireland, Poland and Switzerland.

Its BWG Group in Ireland increased turnover 4.3 percent on strong contributions from all the retail brands and the corporate retail stores.

Spar Poland achieved the strongest growth during the period as turnover increased by 38.1 percent in local currency and was up by 48.8 percent in rand terms.

However, the group said the Polish business also experienced setbacks as a consequence of the pandemic lockdowns, but good progress continues to be made in many of the strategic focus areas.

In Switzerland, the group reported a 13.8 percent increase in turnover in Swiss franc terms.

Spar is set to release its half year results in May. Andrew Padoa of Sasfin Wealth said the results were good given the trading environment.

“I am rather surprised that the shares are down by 6 percent, but that could be attributed to Spar grocery business which grew sales by 2.8 percent.

“Checkers provided an update yesterday (Monday) and Checkers and Checkers Hyper had sales growth of 11.1 percent, although it was not over the same reporting period,” Padoa said.

However, he added that the Swiss and Polish businesses were excellent after reporting sales growth of 14 percent and 38 percent, respectively.

Spar shares closed trading 7.37 percent weaker at R195.99 on the JSE yesterday.

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