Spar reported an 8.4 percent growth in wholesale turnover to R74.3 billion. Photo: Leon Nicholas/African News Agency (ANA)
Spar reported an 8.4 percent growth in wholesale turnover to R74.3 billion. Photo: Leon Nicholas/African News Agency (ANA)
SPAR SOUTHERN Africa reported an 8.4 percent growth in wholesale turnover to R74.3 billion.     Leon Nicholas African News Agency (ANA)
SPAR SOUTHERN Africa reported an 8.4 percent growth in wholesale turnover to R74.3 billion. Leon Nicholas African News Agency (ANA)
JOHANNESBURG – The Spar Group rose more than 7 percent on the JSE on Wednesday after the retailer confounded the country’s stagnant economy with double-digit growth in profits for the year to the end of September.

Spar jumped the most since 2015 after the group said that its profit increased 18.4 percent to R2.16 billion from R1.83bn last year, while turnover inched up 8.4 percent to R109.5bn against the backdrop of markets that remain tough in all regions of operations.

The group said operating profit surged 7.2 percent to R3bn, while diluted headline earnings per share increased 9.9 percent to 1 160.6 cents a share.

The group declared a 9.7 percent increase in dividend to 800c.

Jordan Weir, a trader at Citadel, said the results were ahead of the market expectations.

“Spar’s results came in slightly higher than analysts’ expectations, even though poor consumer sentiment veiled the market over the last financial period. The stronger earnings are mainly attributable to a well-executed management of costs throughout the business, as well as efficient margin management on products,” Weir said.

Spar Southern Africa reported an 8 percent growth in wholesale turnover to R74.3bn, and the result includes the S Buys pharmaceutical business acquired in the 2018 financial year.

The liquor division, Tops, again reported a strong performance, with retail turnover up 14.5 percent to R12.8bn as ongoing marketing initiatives and a refreshed brand image won consumer spend.

The Tops network increased by 48 stores on a net basis to 822 stores, while 47 stores were revamped.

Hardware section Build It upped its sales 6 percent to R8bn, and The Spar Southern Africa store network increased to 2349 stores, with 169 new stores opened. The group completed 298 store upgrades across all brands.

In Ireland, the BWG Group again delivered a strong financial result and reported euro-denominated turnover growth of 6.2 percent to 1.5bn (R24.61bn). The group said this number was boosted by the recent business acquisitions.

Spar Switzerland reported turnover of R10.4bn, but operating profit decreased 33.2 percent to R83.3 million.

Tasneem Samodien, an analyst at Old Mutual Wealth Private Client Securities, said Spar generated a resilient performance in a constrained local retail environment.

“While revenue growth was driven by a strong contribution from all regions and lines of business, Tops stood out, generating 14.5 percent revenue growth during the period. A strong top-line performance contributed to an 18.4 percent increase in profit after tax to R2.1bn,” Samodien said.

Spar said in southern Africa all indicators continue to suggest that consumers will remain under financial pressure, and confidence is to remain unchanged in the medium term.

“Against this economic backdrop, Spar’s extensive distribution capability and market-leading brands will ensure that its independent retailers remain suitably positioned to deliver exceptional value to consumers,” the group said.

Spar shares gained 5.55 percent to close at R209 on the JSE on Thursday.


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