By Nqobile Dludla
JOHANNESBURG (Reuters) -SPAR Group is likely to miss a target for its Polish grocery business to breakeven by the end of this year due to a slower-than-expected uptake from independent retailers, the South African wholesaler’s CEO said on Wednesday.
After buying a controlling stake in Polish deli and supermarket chain Piotr i Pawel group in 2019, SPAR has been working to turn that business around by attracting retailer customers with better rebates, closing loss-making stores and rolling out new ones in new areas, like fuel forecourts.
But the retailer uptake so far has been slower than expected.
Chief Executive Officer Brett Botten told investors that retailer loyalty levels in the south of Poland – which have been particularly low – had risen to 31% at the end of March from 25% a year earlier, which is “not improving quickly enough to deliver the required levels of profitability for this business.”
“We had guided breakeven in the month of December 2022, however it’s unlikely that we’ll meet this target,” he added.
During the period, the grocery wholesaler served about 90 retailers in the south of the country with notices to sign new contracts with increased rebates.
Botten said several retailers had already committed to the new terms and once there was certainty on the outcome of the contract negotiations, SPAR would provide an update on the profitability target for that business.
Earlier, SPAR reported a 3.7% rise in diluted headline earnings per share (HEPS), the main profit measure in South Africa, for the six months ended March 31, as its businesses continued to recover from COVID-19 restrictions.
Group turnover rose by 5.2% to 67.6 billion rand ($4.38 billion), while operating profit grew 7.1% to 1.8 billion rand.
($1 = 15.4263 rand)
(Reporting by Nqobile DludlaEditing by Shailesh Kuber and Mark Potter)
