Spar wants to double revenue contribution from its adjacent businesses, which include building material and pharmacy operations.
The retailer owns the Build it brand, which has about 410 stores in SA, Eswatini, Namibia and Mozambique, and generates annual revenue of about R10bn. It will stock new product lines to expand its products.
“We are the biggest building material supplier for independent suppliers in the country,” said Spar group CFO Reeza Isaacs.
We are the biggest building material supplier for independent suppliers in the country. We are currently a R10bn (annual) business and we intend to double the size of the business in the next five years.
— Spar group CFO Reeza Isaacs.
He said the building materials supply industry was dependent on the status of the economy and confidence in economic outlook, and given the recent interest rate cut, the business is well positioned for growth.
About 60% of Build it customers are contractors, while 40% are walk-ins. It reported R5.07bn revenue for the six months to March, up from R4.8bn.
Spar CEO Angelo Swartz said Build it continued to perform well even in a constrained environment with seasonal rainfall impacting on some trades during the half year to March period — “the team delivered best in class results”.
He said the group plans to add new products, upgrade its rewards programmes and launch on-demand service, Build it 2 U. Build it and the pharmacy operations, Spar Health, performed better than the core Spar business during the period under review.
Spar Health continues to gain traction, with revenue growth of 14%, primarily driven by strong gains in Wholesale and Scriptwise, a specialised pharmacy and delivery services. Spar is increasing pharmacist training facilities and establishing distribution centres in the Western Cape and KwaZulu-Natal to boost the growth of its health business as it aims to double the size of its pharmacy network by 2028. The pharmacy has 118 outlets.
Spar reported marginal decline in group revenue to R66.1bn from R66.2bn. Headline earnings per share (HEPS) were down 0.4% to 450.1c. “Sales growth was below expectations. The South African consumer is under severe pressure, and we saw softness in our inland region,” said Swartz.
Following its exit from Poland, Spar will also sell its operations in Switzerland and the UK but will continue operations in Ireland and a joint venture in Sri Lanka. “Our joint venture continues to show exciting growth, double digit revenue gains, and expansion in corporate and independent stores. We are preparing to roll out Spar 2U, it’s a small operation but it shows what the model can do with the right partner and right conditions,” said Swartz.
Isaacs said only 15% of the food retail industry is formalised in Sri Lanka “so, the runway to roll out stores quickly is definitely there”.
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