Despite the current economic turmoil and consumers’ shrinking disposable income, the Spar Group performed well, the listed grocery distributor said on Tuesday.
Spar was releasing its interim results for the six months ended March 31 2009.
CEO Wayne Hook attributed the company’s good sales to a combination of growth at existing stores; aggressive promotional activity; new store openings and the lingering effects of higher food inflation.
”All of the above helped to ensure that we maintained a consistent level of turnover growth in spite of the clearly weakening economy,” he said.
For the period under review, turnover was up 24,5% — slightly ahead of the turnover growth for the first half of 2008 — to R16-billion.
Operating profit was 22% higher at R605-million and headline earnings per share came in 20,5% higher at 242,5 cents a share.
However, Hook anticipated that turnover would decline in the second half as a result of ”the deteriorating economy and an anticipated decline in food price inflation”.
However, he said Spar would continue with its robust expansion programme.
A total of 34 new Spar stores were opened during the period under review and total Spar retail trading space increased by 4,4%.
As at the end of March this year, the group serviced 239 SuperSpar, 460 Spar and 147 KwikSpar stores.
Further new store openings were planned for the remainder of the financial year.
A highlight of the results was the ”buoyant” trading at Spar’s Tops liquor outlets.
However, sales at Spar’s Build it stores were adversely affected by the deterioration in the economy and the residential building sector in particular, the company said.
Overall, the Spar Group gained market share across all of its trading platforms, although the extremely competitive retail environment resulted in the group’s gross profit margin declining slightly to 7,9%, down from 8,1% in 2008.
Net margin, however, remained unchanged at 3,8% as a result of reasonably well controlled expenses.
The company declared an interim dividend of 122 cents per share. – Sapa