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Spar’s sales rise, but liquor hit by alcohol ban

Sending its shares down more than 5%.
Image: Moneyweb

South African grocery retailer SPAR Group said on Tuesday group sales rose by 9.8% in the 18 weeks ended January 29 but the country’s ban on alcohol hit liquor sales, sending its shares down more than 5%.

SPAR, which has more than 4 300 stores across Southern Africa, Ireland, Poland and Switzerland, said group sales rose to R42.99 billion ($2.98 billion) from R39.15 billion in the previous corresponding period.

South African retailers had largely soft trading at Christmas and in “Black November”, an extension of Black Friday when retailers offer discounts, as shoppers spent less on groceries.

Total sales in Southern Africa, SPAR’s largest market, which include grocery, liquor and building materials, rose by 3.4%, reflecting weaker consumer spending and lost liquor business, the retailer said.

Its core SPAR grocery business in the region increased sales by 2.8%. Liquor sales fell by 17.9%, adversely impacted by the ban on the sale of alcohol in South Africa imposed late in December as part of Covid-19 lockdown restrictions.

By 0935 GMT, shares in SPAR were down 5.53% to R199.89, on track for their biggest daily fall in 10 months.

The retailer’s building materials and do-it-yourself “Build it” chain was the star performer, with sales up by 25.6%. Demand for construction products remained strong, driven by spending on home improvements as consumers stayed at home due to the pandemic.

The group’s business in Ireland reported strong growth across all retail brands.

A recently acquired retail business in Poland proved vulnerable to the lockdown curbs, disrupting growth plans, but still increased turnover by 38.1% in local currency and 48.8% in rand terms.

Read the group’s full 18-week trading update here.

 

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In the old days, inflation went up because people had more money in their pockets. It was known as market forces and seen as a result of supply and demand. The vast majority is, however, getting poorer, so that clearly doesn’t apply anymore. Nowadays inflation goes up because of a decision made in the HQ of Spar, P&P or Checkers. That decision is based on pure greed, so it shouldn’t be known as inflation anymore, but greedflation. I have been watching the contents of trollies at cash registers. It is getting less and less, with cheaper cuts of meat, cheaper bread, cheaper… well, you get the picture. The result is skeletons walking around… and if you don’t believe me, drive through the townships and look at the people walking the streets. There are an increasing amount of people who do not have enough to eat. These decisions are made by CEO’s, ably supported by managers and boards. It has nothing to do with a fair return on investment. It is the unbridled exploitation of the vulnerable, to get that big bonus, or share allocation, based on insane profits. Spar and the others should hang their heads in shame. Why don’t they rather make more profit by selling more? Why take the easy route by upping prices all the time. It would be a much nobler thing to make money by putting food on more tables, than selling less product at a much higher price. It would also be a much more sustainable and equitable philosophy. Geez, what a lamentable, poor species we are!

End of comments.

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