SPAR trading under surreal conditions


SPAR trading under surreal conditions

Published Date: 2020-09-21 | Source: Stephen Gunnion | Author: Stephen Gunnion

SPAR trading under surreal conditions

The wholesaler and retailer has benefitted from strong sales in Switzerland and Ireland and the weaker rand.

SPAR has reported a strong rise in 11-month sales as its operations in Ireland and Switzerland made up for weaker growth in southern Africa due to the ban on tobacco and alcohol sales. The group, which is a wholesaler and distributor of goods to its franchised retail outlets, says it has been trading under 'surreal conditions' recently due to lockdown measures across all the regions it operates in.

In an update for the 48 weeks to 28 August, SPAR said local sales increased by just 1% between April and the end of August after growth of 7.8% over the preceding six months. Cigarette sales slumped by 30.5% for the 11-month period while liquor sales dropped 16.4%. Its building materials business, Build it, which was already under pressure due to the weak economy, reported a 2.4% decline in sales after losing five weeks of trade due to the lockdown.

BWG Group in Ireland was affected by extensive closures and restrictions on the hospitality sector, which had an adverse impact on its food services and cash and carry divisions. However, its neighbourhood retailers reported increased business activity as consumers shopped locally. The Swiss business experienced what it said was an 'extraordinary performance', with consumers supporting local retailers extensively during the general lockdown.

Group sales increased by 12.4% to R112 billion, with southern Africa turnover rising 4.8% as sales from its core SPAR stores made up for the declines in tobacco and alcohol sales. In Ireland, revenue increased by 5.5% in euro and 18.7% in rand, while turnover in Switzerland jumped by 11.4% in Swiss francs and 31.1% in rand terms. It said the development of its fledgling Polish business was frustrated by Covid-19 restrictions but contributed R1.97 billion to group turnover.

SPAR's results for the year to end-September are scheduled for release on 18 November. Its shares closed 3.8% higher at R187.63 on Friday.

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