The SPAR Group, reporting an increase in full-year earnings, advanced its strategic goals at its SA operations and maintained a steady market share while driving a 380% year-on-year surge in order volumes for its SPAR2U’s on-demand shopping.
The group’s results for the year ending September showcased significant strides, including robust growth across value-focused formats and the pharmacy business.
Additional highlights include the completion of the SPAR Poland sale, a debt reduction that strengthened the balance sheet, the resolution of SAP enterprise resource planning system-related issues at the KwaZulu-Natal distribution centre, and progress towards achieving a 3% operating margin in Southern Africa.
These achievements contributed to group turnover rising to R152.3bn, with earnings per share up 24.5% to 855.9 cents.
SPAR Group chief operating officer Megan Pydigadu said looking at the Eastern Cape, there had been pressure on consumers this year.
“Consumers are looking for affordable prices and compete when buying groceries.”
She said SPAR had a strong presence in the Eastern Cape, upwards of 25% of the market share.
“Our business does well in the rural parts of the province and competes in that space.”
She said there was always a plan for expansion in the province.
“Our SaveMor brand plays in the low end of the market.”
However, she said it was in urban areas where SPAR thrived.
She said SPAR2U could be rolled out to more rural areas if there was high demand.
SPAR Group chief executive Angelo Swartz said the journey to future-proofing SPAR and solidifying its status as the retailer of choice had gained strong momentum in recent months.
“Through disciplined financial management, we have successfully reduced our debt, enabling us to achieve growth where it counts and create greater stability moving forward,” he said.
“Our success is also underpinned by our business model, empowering retailers to serve their communities with excellence and agility.
“While challenges remain, we are confident that our focus on shared growth will drive sustainable success for the group and the communities we support.”
Spar Southern Africa, encompassing SPAR, Tops at SPAR, Build it, and Pharmacy at SPAR, reported a 3.7% increase in turnover despite a challenging trading environment characterised by high inflation, elevated interest rates, and low GDP growth.
Pharmacy at SPAR stood out with a 14.6% turnover growth driven by the strong performance of Scriptwise.
The liquor division achieved an 11% improvement at the wholesale level, while Build it recorded a 2.3% rise in turnover, recovering from a 4.3% decline in the prior year.
“Growth in current market conditions is exceptional and a testament to the trust our customers place in us,” Swartz said.
“We are pleased with the resolution of our SAP integration issue.
“Not only has this resulted in improved visibility in pricing and subsidies for our retailers, but it addressed warehouse management inefficiencies that increased labour and transport costs through the selection of a new warehouse management system.
“We are now experiencing service levels of more than 90%, with KZN loyalty rates rising from 68.6% in the second quarter of 2024 to 70.9% in the fourth quarter of 2024, putting us back on track as the reliable and efficient partner that our retailers have come to expect.”
The group’s operating profit rose by 15.1% year-on-year to R2.9bn, with an improvement in the operating profit margin to 1.9% from 1.7% in 2023.
These results reflect the group’s increased focus on cost management and efficiency initiatives, with operating expenses growing by just 3.5%.
“Our independent retailer model offers powerful opportunities for retailers, showcasing the value we deliver and the potential we unlock through fit-for-purpose retailer development, e-commerce innovations, discounted supermarket formats, and specialised business offerings,” Swartz said.
SPAR’s tiered private label approach is on track to offer better value for all shopping budgets, while the launch of a bespoke high-end offering is set to capture the higher-income consumer segment, reinforcing SPAR’s commitment to quality across all market segments.
“Meanwhile, our revitalised SaveMor store format will include high-quality products at competitive prices.
“This model will focus on operational efficiency to establish SaveMor as a leading discount retailer,” Swartz said.
SPAR’s on-demand grocery delivery service, SPAR2U, is expanding to meet consumer needs.
“We are proud of this growth and remain committed to further innovation in this space.”
Internationally, SPAR saw mixed results.
The BWG Group in Ireland and southwest England achieved a 6.7% turnover growth in rand terms (2.8% in euro), supported by innovation and strong community engagement.
While SPAR Switzerland faced economic pressures, with consumers opting for cheaper alternatives locally and abroad, the decline in turnover was limited to just 0.3% in rand terms, reflecting strategic resilience.
HeraldLIVE
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.