18 May - 6 min read

Trading update and trading statement

Trading update and trading statement

(Incorporated in the Republic of South Africa)
Registration number 1967/001572/06
ISIN: ZAE000058517
(“SPAR” or the “Group”)



For the six months ended 31 March 2021 (“Results”) the Group increased turnover by
7.5% to R64.2 billion (2020: R59.7 billion). Adjusted for the additional day in the prior
comparative period, the Group increased turnover by an effective 8.1%.


Total wholesale turnover for Southern Africa increased by 3.1% continuing to reflect the
weaker consumer spend and disruptions to the liquor business. Within this, the core SPAR
grocery business reported turnover growth of 0.8%. The business slowed significantly for
the month of March 2021, as it lapped the extraordinary performance recorded in March
2020, when consumers stocked up in advance of the COVID-19 pandemic lockdown
regulations. Internally measured price inflation of 5.2%, reflects the continued pressure on
a wide range of grocery items. The business has seen changing consumer behaviour over
the past twelve months due to the pandemic. It benefitted from increased home
consumption with consumers choosing local, convenient and community-based SPAR
stores during the initial strict lockdown. As lockdown measures were eased, consumers
ventured back to restaurants as well as the larger shopping malls, where SPAR has low
exposure, negatively impacting the business during this period. This trend, coupled with
the liquor trading restrictions has attracted less customers for the overall ‘weekend shop’.
This has been particularly experienced by the smaller format stores.

The wholesale liquor business continued to be negatively impacted by the reduced retail
hours and lost trading days. During the six month period ended 31 March 2021, TOPS at
SPAR retailers lost 72 trading days, approximately 40% of available trading days. The
liquor business has started to recover in the last quarter, with wholesale liquor sales
declining by 7.8% for the six month period, against a decline of 17.9% for the 18 weeks
to 29 January 2021, as previously reported. In a related category, the cigarette business
was severely impacted by the initial restrictions on the sale of cigarettes. This business
has not seen a full recovery since restrictions were lifted and turnover was down 13.1%
for the period.

The Build it business continued to outperform expectations with sales of building materials
increasing by a remarkable 26.2%. The consumer in this market remains surprisingly
resilient and continued to invest in home improvements during the period.


BWG Foods delivered strong turnover growth of 13.3%, a solid 3.3% in EUR-denominated
terms against 4.3% in EUR-denominated terms for the 18 weeks to 29 January 2021, as
previously reported. This slowdown in the month of March 2021 demonstrates the base
effect of the increased sales ahead of the initial lockdown in March 2020. All retail brands
continued to perform strongly as consumers supported their neighbourhood stores during
the extended lockdown as the country experienced its third wave of the pandemic.

The hospitality and foodservice businesses continued to be severely impacted as bars,
hotels and restaurants remained closed for the period.

The South West England based business, Appleby Westward Group, maintained their
strong contribution to the business through the new corporate retail store additions,
together with growth in neighbourhood retail driving the wholesale business.


Despite the growth slowing in the last two months of the period, impacted by the base
effect of the initial lockdowns in the prior year, this business reported an increase in
turnover of 21.6% for the six month period. This represents an impressive 11.1% growth
in CHF-denominated terms, against an increase of 13.8% in CHF-denominated terms for
the 18 weeks to 29 January 2021. This region continues to experience the impact of the
COVID-19 pandemic with ongoing lockdown regulations. Neighbourhood SPAR retailers
have continued to benefit from consumers choosing to shop locally over the large malls.

The acquisition of the Store Services AG business, the owner of 60 petro-convenience
stores, in March 2021, has also positively impacted the wholesale business.

With lockdown regulations causing many restaurants, bars and hotels to close for partial
periods, the Top CC cash and carry business reported a less than expected decline in
turnover of 3.5% in CHF-denominated terms, recognising Swiss managements’ initiatives
to drive sales.


The Polish business reported turnover growth of 32.2% (26.9% in PLN-denominated
terms). Trading performance reflects slowly improved retailer loyalty year-on-year.

During the reporting period the business rescue proceedings of the Piotr I Pawel business
acquired in 2019 were finalised. This is a significant step towards stabilising the business.

Despite the ongoing disruptions caused by the COVID-19 pandemic, the business has
made steady progress in the first half.


In terms of paragraph 3.4(b) of the JSE Limited Listings Requirements, companies are
required to publish a trading statement as soon as they are satisfied, with a reasonable
degree of certainty, that the financial results for the current reporting period will differ by
at least 20% from the financial results of the previous corresponding period.

SPAR is currently in the process of finalising the Results and expects to report an increase
in the Group earnings fundamentally driven by the following factors:

   -   an exceptionally strong underlying performance in the Swiss and Irish businesses,
       together with the reduction in operating losses for the Polish operations; and
   -    the final minority purchases in both the Irish and Swiss businesses having been
        fully settled during the period, thereby removing the need for further fair value
        adjustments previously arising on the financial liabilities, which had a material
        impact on earnings in the prior period.

                                                            Six months to             Six months to            Six months to
                                                           31 March 2021             31 March 2021             31 March 2020
               Reported earnings
                                                         Expected range             Expected range                 Cents per
                                                               % growth             cents per share                   share
 Headline earnings per share (HEPS)                        +47% to +57%              599.8 to 640.6                   408.0
 Diluted HEPS                                              +47% to +57%              597.6 to 638.2                   406.5
 Earnings per share (EPS)                                  +53% to +63%              596.7 to 635.7                   390.0
 Diluted EPS                                               +53% to +63%              594.4 to 633.3                   388.5

 Normalised* HEPS                                          +30% to +40%              590.7 to 636.2                   454.4
 Normalised* diluted HEPS                                  +30% to +40%              588.5 to 633.8                   452.7

* Headline earnings adjusted for fair value adjustments to, and foreign exchange effects on financial liabilities, and
business acquisition costs.


The Group plans to release the Results on SENS on 25 May 2021. The interim results
webcast presentation will follow at 14h00 South African Standard Time on 25 May 2021.
The SPAR management invites all interested analysts and shareholders to register via the
following link on the day https://www.corpcam.com/Spar25052021.

Shareholders are advised that this announcement does not constitute an earnings
forecast, that the financial information provided herein is the responsibility of the directors,
and that such information has neither been reviewed nor reported on by the Group’s
external auditors.

By order of the Board
18 May 2021

One Capital

Corporate Broker
Rand Merchant Bank, a division of FirstRand Bank Ltd

Date: 18-05-2021 02:55:00
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