Spar reports 11% increase in FY HEPS

Retail group Spar's recent financial results reveal a 4 per cent increase in full-year turnover, showcasing resilience amidst challenging market conditions. The group faced a slowdown in turnover growth in the latter half of the financial year, impacted by ZAR translation effects on foreign subsidiaries due to currency strengthening. With net debt reduced to R9.1 billion, Spar's CEO, Angelo Swartu, delved into the company's performance and strategies in a recent CNBC Africa interview. Swartu reflected on the past year, characterizing it as faced with various challenges but emphasized their effective navigation through them. Notably, he highlighted the solid performance of Spar's liquor and building materials businesses in the South African market. The liquor business remained a market leader, while Build it saw significant progress driven by better macroeconomic conditions. The focus on affordability and value in the food sector led to retail partners' substantial growth, maintaining the Spar brand's strength and market share. Addressing the lingering SAP issues in KZN, Swartu acknowledged the pricing and gross margin challenges faced. However, with system changes implemented and positive results in October, he expressed optimism that the worst was behind them. He also discussed the heightened competitive activity in South Africa, driven by aggressive promotions and advertising, resulting in a more consumer-friendly market. Concerns were raised about Spar's European operations, particularly in the UK and Switzerland, where macroeconomic factors and seasonal trends impacted performance negatively. Swartu recognized the structural changes in the retail sector, with mainstream grocers shifting towards convenience segments, affecting Spar's market positioning. In response, Spar is considering revitalizing its formats, including the discount Save More and introducing a new high-end format in 2025. Looking ahead, Swartu emphasized maintaining CapEx spending for maintenance and digitization efforts to modernize the business. Spar aims to balance store openings and refurbishments while focusing on enhancing the digital capabilities of the company. As Spar demonstrates resilience amidst market challenges, Swartu's insights shed light on the strategic decisions driving the group's growth and adaptability. With a focus on value delivery, market positioning, and digital innovation, Spar looks poised to navigate the evolving retail landscape and drive future success.