Spar shares jump 9% after strong results

Supermarket retailer Spar recently announced its full-year results, which led to a surge in its share price by 9%. The company reported an 8.8% increase in normalised diluted headline earnings per share, showcasing a strong performance in a challenging market environment. CEO Graham O'Connor spoke to CNBC Africa about the key drivers behind this success and the future outlook for the company. Despite facing obstacles such as the impact of COVID-19 on liquor sales and retail operations, Spar managed to navigate through the difficulties and deliver commendable results. One of the main factors contributing to Spar's better performance was the resilience of its retail stores. International business, particularly in Ireland and Switzerland, performed exceptionally well. The lockdown measures, although challenging, also had a positive effect on Spar's business, as cross-border shopping increased. Additionally, the company implemented strong hygiene protocols in its stores, which reassured customers and helped drive sales. The closure of liquor sales and reduced trading hours had a significant impact on Spar's revenue during the lockdown period. The company estimated a loss of around two billion rand in liquor sales alone. However, the eventual relaxation of regulations regarding liquor sales provided a much-needed boost to Spar's performance. With shoppers turning to conveniently located Spar stores, the company was able to capitalize on its strategic positioning in suburban areas. Looking ahead, Spar remains focused on enhancing its retail offering and expanding its store network. The company plans to add approximately 150 stores in South Africa, 100 stores in Switzerland, and around 150 stores in Ireland. By continuing to prioritize entrepreneurship, passion, and customer satisfaction, Spar aims to strengthen its market position and drive sustainable growth. When asked about potential expansion into other African markets, CEO Graham O'Connor emphasized Spar's current focus on consolidating its presence in key regions. While the company had operations in Zimbabwe in the past, its primary focus now lies in strengthening its presence in markets like Switzerland and Mozambique. Spar has no immediate plans to venture into new territories on the African continent, choosing instead to optimize its existing operations for continued success. Overall, Spar's robust performance in the face of adversity reflects the company's ability to adapt to changing market conditions and deliver value to its shareholders. With a strategic approach to retail expansion and a commitment to quality and customer service, Spar is well-positioned to navigate the challenges of the post-pandemic business landscape.