Bottle stores help Spar counter slowing grocery sales growth

The group, which cut its interim dividend to R2.40 from R2.55 as it struggled to turn its Swiss acquisition profitable in the first half of its financial year, compensated for this by raising its final dividend to R4.35 from R4.10. This took its total dividend for its 2017 financial year to R6.75, a 1.5% increase from the prior year's R6.65.

Spar reported on Wednesday morning that overall revenue grew 5.4% to R97bn. Pretax profit was up 1% to R2.5bn. Its Southern African stores grew revenue by 4.6% to R65bn, contributing 67% of the group's total. Before-tax profit, however, declined 3.4% to R1.9bn, which accounted for 78% of the group total.

Its best performer was liquor chain Tops, which grew retail turnover by 12.4% to R10bn and wholesale turnover by 11.2% to R5.8bn. "Despite ongoing delays in obtaining liquor licences, 51 new Tops stores opened and the brand closed the year with 733 stores," the results statement said.

Its flagship Spar grocery stores grew retail turnover by 4.5% to R76.5bn and wholesale turnover by 4.2% to R51.7bn. A net 13 Spar stores were opened during the year, bringing the total number of stores to 903 by 30 September. Internally measured food inflation for the year was reported at 6%, significantly lower than at the half-year due to declining commodity prices in the second half, Spar said.

Hardware chain Build It grew retail turnover by 4.3% to R12.2bn and wholesale turnover by 2.1% to R7.1bn. At year-end, Build It's store network stood at 368 stores, including 27 new Build It outlets opened during the year.

Measured in euros, its Irish division grew turnover by 1.5% to 1.4bn. But measured in rand, its Irish stores suffered an 11% decline in turnover to R21bn, contributing 21% of the group's total. But the before-tax profit from its Irish stores rose 7.9% to R466m, contributing 19% of the group's total.

Turnover from its Swiss stores jumped 72% to R11.2bn and before-tax profit grew 4% to R92m. "The results achieved in this period are early signs that the turnaround strategy being implemented in Switzerland has started delivering the expected benefits," Spar CEO Graham O'Connor said in the results statement.

Source: BDpro