Spar warns of rising foods costs and ‘unprecedented’ consumer pressure

Retail group Spar is bracing for “unprecedented” pressure on consumers as a result of the Covid-19 pandemic, with the virus already partially responsible for profits falling by more than a quarter in its half-year to end-March.

The pandemic has shuttered retail stores across the globe, while the group has also seen a prohibition of liquor sales in SA. Spar warned on Thursday it expected food prices to rise, and that management was actively focused on the group’s supply chains.

Profit after tax fell 28.7% to R714m in the group’s half-year to end-March, partially due to the effect of Covid-19 on its recent acquisition of Polish-based Piotr i Pawel Group.

During the period, the group completed the acquisition of Piotr i Pawel and secured the rights to the Spar licence to trade in Poland. However, suspension of court activity has delayed restructuring the group and also affected trading.

Group turnover rose 10.1% to R59.7bn, but the group said it had decided on a “conservative” approach to its dividend, cutting its interim dividend 29.6% to 200c.

“Given the important role we play in food wholesale and retail, contingency plans are essential to ensure the robustness of our supply chains and our management are actively focused on this,” the group said.

“There is no doubt that the world is changing, and against the backdrop of this pandemic, our businesses will continue to adapt to changing consumer behaviour.”