Retail group Spar says it's pleased with almost double-digit sales growth in its grocery business so far in its 2023 year, although sales inflation was slightly higher, while it also felt the effects of the hangover effects from Covid-19 in terms of liquor and building materials sales.
Group turnover rose 7.8% in the 18 weeks to 28 January, the company said in an update accompanying its AGM, with its SA grocery wholesale business increasing sales by a "very pleasing" 9.7%, amid internal selling price inflation of 9.9%.
The company said it saw a solid performance across both perishable and dry groceries, but TOPS liquor sales only rose 1.6%, while its home renovations business, Build it saw sales dip by 2.8%.
Spar had benefited in the prior period from an easing of Covid-19 restrictions, and in the prior period liquor sales surged by more than half, while other retailers in the home improvement industry have reported the pandemic-inspired boom has now waned, and the market is facing increased competition, as well as more pressure on consumer spending.
Making brief remarks on the update at the AGM, CFO Mark Godfrey described the SA grocery performance as "very pleasing," while he said Build it's performance had been "credible and market leading".
Overall, it was "solid trading performance by the group in a challenging time," he said. In midday trade, Spar's shares were up 0.31% to R144.69, having surged almost a quarter in 2023, though they are still down 15% on a one-year basis.
Spar, valued at about R27.8 billion on the JSE, generated about two-thirds of revenue and about three-quarters of its profits in SA in 2022, but also operates in Poland, Ireland and Switzerland.
In Ireland and southwest England, Spar said it saw 8.9% turnover growth in euro terms, describing this as "strong," while sales in Switzerland fell 3.8% in local-currency terms, amid a loss of retail sales due to the transfer of a group of corporate stores to independent owners.
In the group's struggling Polish business, sales grew 4.6% in local-currency terms, despite the loss of 58 retailers in July 2022. Spar had 180 retail stores in Poland as of the end of September, and had said previously the retailers that opted to exit had low purchasing loyalty.
The question of the future of Spar's business in Poland - which has made losses of R1.5 billion over the past three years, and whose liabilities exceed assets by R1 billion - was raised by shareholders at Tuesday's AGM.
Spar's newly appointed chair, Mike Bosman, said he along with other executives, would be travelling to the country soon, and it was possible the group may ultimately decide to exit the country. He added, however, that it was a "great market".
"We need to come to some sharp and decisive decisions when it comes to Poland," he said. "It is really a question of doing a deep dive and coming back to shareholders with a plan," he said.