Retailer Spar has reported a notable rise in annual profit, signalling resilience amid a challenging trading landscape. The company, which operates extensively across South Africa as well as in Ireland, South-West England, and Switzerland, is feeling the heat from soaring costs related to food, fuel, and energy.
Spar’s financial results echo the complexity of today’s economic climate, with the company revealing a 3.7 percent increase in turnover within its South African operations. This is particularly commendable considering the broader backdrop of high inflation, elevated interest rates, and stagnant GDP growth that has characterised the nation’s economy during the reported period.
Spar’s Chief Executive Officer, Angelo Swartz, reflected on the difficulties that the retail environment has posed, saying, “I think generally the economic environment across the globe has been challenging for all of us, South Africa obviously looking a lot more positive. Our financial year runs from October to September, so really the South African business saw the benefit of that towards the tail end of the year.” This optimism contrasts sharply with ongoing pressures, suggesting a glimmer of hope for consumers and businesses alike as inflation begins to show signs of easing in select areas.
Commercial challenges have not been limited to South Africa. Earlier this month, Spar announced the impending sale of its Polish operations, a move aimed at reshaping its portfolio. Swartz acknowledged the difficulties faced in Poland, noting that the decision follows five tumultuous years that were further compounded by the global pandemic’s disruptive impact at the outset of their investment in Switzerland. “So, as you know we’ve had an investment into Poland some 5 years ago. It has been a challenging market for us,” he explained.
Amid these dynamics, industry analysts have shared mixed sentiments regarding Spar’s recent performance. Muhammed Wagley, Portfolio Manager at Sasfin Securities, expressed disappointment, suggesting the market reacted negatively to the results and citing the company’s dividend strategy as a contributing factor. “I think performance-wise; it was a little bit disappointing, I think they’re still seeing some headwinds from failing to fully recover from the SAP implementation thing which was one of the big stories of last year,” Wagley observed.
Notably, the retailer has focused efforts on addressing integration issues stemming from its IT system, SAP, and has indicated that significant progress is being made in this crucial area. This adaptation may play a pivotal role in how the company navigates the foreseeable obstacles ahead.