Spar has announced its group results for the year ending 30 September 2024, showcasing a strong performance despite the challenges posed by high inflation and economic pressures.
The group’s turnover rose 4.0% to R152.3 billion, while profit after tax surged by 20.9% to R1.6 billion. This growth is attributed to strategic operational improvements and a strong focus on cost management.
Key highlights from Spar’s continuing operations include a 13.9% increase in EBITDA to R3.8 billion and a reduction in net borrowings by 8.9%, bringing them to R9.1 billion.
The group’s earnings per share grew by 24.5% to 855.9 cents, underscoring its financial resilience in a tough retail environment. Operating profit rose 15.1% to R2.9 billion, with an improved operating profit margin of 1.9%.
As part of its broader growth strategy, Spar is intensifying its focus on value-driven retail offerings. The group has revitalised its SaveMor store format to better compete in the discount retail sector.
SaveMor will now offer a range of high-quality products at competitive prices, positioning it as a leading discount retailer.
This move comes in response to consumer demand for more affordable shopping options amidst ongoing financial pressures, with Spar also enhancing its tiered private label strategy to cater to different customer segments.
Spar will join the discount supermarket war between Shoprite’s Usave, and Pick n Pay’s Boxer, the latter business officially listing on the JSE on Thursday.
The company also highlighted the continued success of its SPAR2U on-demand grocery delivery service, which saw a dramatic 380% increase in order volumes year-on-year, reflecting the growing demand for convenience-based retail solutions.
“In South Africa, we saw strong growth in our value focused formats compared to subdued growth in our higher end stores, illustrating the prevailing tough macro-economic conditions and the impact on the middle and higher segment consumers.
“We believe that every customer should be treated as a segment of one, and we are focused on clarifying our market positioning through clearer format and brand architecture,” the group said.
To that end, SPAR said its tiered private label approach is well placed to offer better value for all shopping budgets with the launch of a bespoke high-end offering seeking to capture the higher income consumer segment.
“The revitalised SaveMor store format will include high quality products at competitive prices and the model will be focused on operational efficiency to establish SaveMor as a leading discount retailer.”
In Southern Africa, Spar South Africa achieved a 3.7% increase in turnover, despite a challenging trading environment characterized by inflation and high interest rates. The company’s grocery and liquor turnover grew by 3.6%, with private label products seeing a notable 7.0% growth.
The Build it and Pharmacy segments also performed well, with Build it returning to growth after a decline in the previous year and Pharmacy seeing a 14.5% rise in turnover.
Meanwhile, Spar’s European operations faced mixed results. In Ireland and South-West England, turnover grew by 6.7% in ZAR terms, driven by successful integrations and cost containment measures.
However, the UK business, Appleby Westward, struggled with poor weather and a challenging retail environment, resulting in a decline in turnover.
Spar Switzerland also faced difficulties, with a 6.2% drop in turnover, attributed to tough consumer conditions and competitive pressure.
Spar said it has made significant strides in addressing operational inefficiencies, particularly related to its SAP system implementation in South Africa.
The group reported improved service levels and reduced costs in the KwaZulu-Natal region, where issues from the SAP system rollout are being resolved.
Furthermore, the company has focused on cost-saving initiatives across its international operations, especially in Switzerland and the UK, where competition remains fierce.
