Following the release of SPAR’s figures for the six months ending 31st March 2023; Joe Dawson, retail aAnalyst at GlobalData, a leading data and analytics company, offers his view: “Despite high food inflation lifting turnover in most of its key markets in H1 2023, SPAR’s operating profit was heavily restricted by a combination of inflationary cost pressures, high interest rates in all countries and software difficulties in Southern Africa. Overall group turnover increased by 7.9% to R72.9bn ($3.98bn), while operating profit declined 17.5% to R1.5bn ($8.2bn), and a -30.2% decrease in diluted headline earnings per share means that shareholders will not receive a dividend.
“Southern Africa, the largest part of the group’s operations, suffered the greatest setbacks, as rolling blackouts cost SPAR retailers over R700m ($38.3m) in diesel for generators and software issues at the KwaZulu-Natal distribution centre negatively impacted volumes. Liquor sales declined 1.9%, against a dramatic increase in the comparative period following the lifting of pandemic related restrictions. The acquisition of the SPAR Encore bakery business and a focus on value with the expansion of the retailer’s private label range has ensured a solid performance in the core grocery business, with sales growth of 7.9%. SPAR will be looking to continue its expansion in Southern Africa and resolve its software issues, as well as further roll out its q-commerce offering SPAR2U, which now operates in 243 sites.
“SPAR’S Ireland and South West England operations under BWG Group have remained resilient as the cost of living crisis puts pressure on consumer purchasing power, with turnover in the area up by 8.8% (in EUR terms), driven by new store openings and an upgraded EUROSPAR store format in Ireland. SPAR Switzerland experienced a decline in turnover of 4.3% (in CHF terms), and volumes were also hit by increased cross border shopping after the lifting of pandemic restrictions and rising inflation.
“Poland has been a difficult market for the retail group to tap into, as the country has been deeply affected by the war in Ukraine, causing a surge inflation over the last two years. The most recent results show some improvement, with turnover growth of 4.9% (in PLN terms), owing principally to the positive impact of the new Czeladz distribution centre on logistics and range in the store network in the South of the country.”
