Spar shares drop after poor sales
THE Spar Group share price slid more than 3percent after the retailer only saw a slight increase in sales for the 18 weeks to end January 31, with a challenging start to the year.
The group reported a 5.4percent increase in sales to R39.79 billion during the period, up from R37.75 billion compared to last year.
Spar Southern Africa increased its sales by 4.9 percent, with the group stating that this reflected the weaker consumer spend, while its core Spar business reported sales growth of 6.1 percent, with same store sales increasing by 4.6 percent.
“Internally measured price inflation of 4.2 percent reflected the upward movement of prices in a wide range of grocery and perishable items.
“The liquor business delivered a somewhat disappointing performance with growth of 4.5 percent in an increasingly competitive retail sector,” the group said.
Build It reported a 3.4 percent decline in sales, reflecting the weak state of the building materials’ market.
The share price declined to R186.44 a share in the afternoon after the release of the trading update, before closing at R186.50.
In Ireland, Spar said growth was reported across all of its retail and wholesale divisions in a challenging economic environment impacted by Brexit consumer concerns.
“In euro-currency terms, this business increased turnover by 0.7 percent, which was assisted by the two recently acquired wholesale businesses.
“Combined with a slightly weakened rand this business reported sales growth of 1,5 percent,” the group said.
Its business in Switzerland continued to reflect the negative local market conditions and its turnover declined by 1.9 percent in Swiss franc currency terms.
“While still disappointing, this performance tracks ahead of the reported Swiss retail market. In rand measured terms this business reported an increase in turnover of 2.6 percent.
“Management remains satisfied that the implemented strategies will continue to show positive results,” the group said.
In Poland Spar concluded the acquisition of the majority stake in the Polish retail business, Piotr i Pawel, on October 1, 2019.
Piotr i Pawel has 77 stores and supermarkets as well as a distribution network in Poland.
The group said the trading performance of this business had been in line with its expectations as the debt restructuring activities continued.
“These proceedings should soon be concluded, and management remains very positive about the prospects of this business,” the group said.
The group added it had signed an agreement confirming its exclusive status as the sole operator of the Spar brand in Poland.
The group will release its half-year results to end March on or about May 13. — IOL