SPAR (South Africa): turnover +13.5% in FY2020

Jon Wright
Head of Insight - RA EMEA

Date : 20 November 2020

SPAR South Africa has published full year results for the year ending September 2020, saying turnover rose 13.5% to ZAR124.3 bn (US$8.1 bn). The company’s operating profit increased by 15.6% to ZAR3.4 bn (US$220.6m), with its profitability ‘positively impacted by a change in sales mix as increased home consumption drove higher-margin grocery and fresh categories’.

A year in crisis

SPAR underlined the impact of the COVID-19 pandemic on its operations. It said it had seen a ‘strong performance’, which had been aided by the ‘head start given shared learnings from SPAR International’. It had responded to the pandemic’s impact by protecting employees, retailers, suppliers, and shoppers, while making sure it managed its supply chain to keep retailers’ shelves stocked. SPAR SA’s operations had benefited from the shift it had seen shoppers’ behaviour, which focused on supporting local stores and retailers, looking for convenient solutions that provided value and health-focused solutions.

Southern Africa: performance impacted by COVID-19 restrictions

In its operations across Southern Africa, SPAR reported turnover growth of 5.8%, to ZAR78.6 bn (US$5.1 bn). Its core grocery business saw turnover grow by 9.2%, to ZAR62.9 bn (US$4.1 bn), while its TOPS liquor business and Build It home improvement segments suffered contractions in their turnover, of 15.8% and 0.9% respectively. While the company’s core grocery operations saw increased sales as a result of the impact of restrictions put in place because of COVID-19, the fall in turnover was driven by trading restrictions implemented on certain categories during the lockdown.

SPAR saw ‘large volume increases for groceries and health and beauty categories, these volumes were largely offset by the loss of liquor and cigarette sales due to the trading ban on these categories’. The rise in grocery sales were aided by changing shopper buying habits, which favoured SPAR’s local and conveniently located stores that are operated by trusted retailers, and shoppers’ increased home consumption more widely. These changing shopping patterns helped drive like-for-like growth of 7.3%, while SPAR’s internally calculated food inflation stood at 3.9%.

Ireland: turnover increased 6.3% in Euro terms

SPAR reported turnover in Ireland rose 20.4% in Rand terms, to ZAR29.9 bn (US$1.9 bn), while saying they increased by 6.3% in Euro terms to €1.6 bn. BWG, its subsidiary in Ireland, benefited from shoppers buying more locally during the pandemic, with its EuroSPAR supermarket format standing out, with sales rising 11.% in local currency terms. Despite the positive results, BWG acknowledged the continued impact of the pandemic on the operations and sales performance of some of its city centre and forecourt-based stores, which had suffered a drop off in sales.

Its retail operations offset the weaker performance of its foodservice and cash & carry divisions. These have been affected by the disruption felt in the hospitality industry in the country. These challenges saw BWG’s chief executive call on the local government to explain how and when it was aiming to lift restrictions so those in the hospitality industry could plan accordingly.

Switzerland: turnover +11.6% in local currency terms

In its Swiss operations SPAR reported growth of 31.7% in Rand terms, to ZAR13.6 bn (US$882.6m), while in local currency they rose 11.6%. SPAR said it had enjoyed growth in all channels of operations. The country’s operations saw ‘significant growth… due to lockdown restrictions forcing consumers to shop locally’.