Spar owner’s profits soar as parent firm gets currency boost

Growth of sales in Spar and Mace stores fuels 41.4% surge in profits for BWG Group

BWG Group’s profit increase was buoyed by the devaluation of the South African rand, which helped its parent company, the Johannesburg-based Spar Group, post a 12.3 per cent rise in earnings. Photograph: Peter Murtagh

BWG Group’s profit increase was buoyed by the devaluation of the South African rand, which helped its parent company, the Johannesburg-based Spar Group, post a 12.3 per cent rise in earnings. Photograph: Peter Murtagh

 

BWG Group, the owner in Ireland of the Spar and Mace chains, posted a 41.4 per cent surge in operating profit in the 12 months to the end of September, as sales grow in a competitive market and the retailer integrates AMD Londis, which it bought last year.

The profit increase to 433.4 million South African rand (€28.2 million) was buoyed by a devaluation of the rand against the euro during the year, helping its Johannesburg-based parent, the Spar Group, post a 12.3 per cent rise in earnings to 2.58 billion rand.

BWG Group’s sales rose by 14.5 per cent to €1.4 billion; however, when they were converted into rand, they soared by 36.8 per cent. Turnover in the Spar brand rose by 6 per cent on a like-for-like basis, which BWG chief executive Leo Crawford estimates was twice the rate of the Irish groceries sector.

Weaker sterling

Speaking to The Irish Times, Mr Crawford said BWG has had a “good start” to the current financial year, notwithstanding the fact a weaker sterling following the Brexit referendum has some impact on its cash and carry businesses along the Border with Northern Ireland.

While the euro has fallen back to 86p from an exchange rate above 91p a month ago, Mr Crawford said: “The unknown factor is what effect Brexit will have on consumer confidence, though overall we’re cautiously optimistic.”

The Irish division’s Appleby Westward unit, operating in the southwest of England, delivered 13 per cent sales growth, including a positive contribution from the purchase in July of Gilletts, a family-owned business operating 63 stores.

Additional outlets

Total store numbers across BWG Group’s store formats increased to 1,340 locations, with 94 new stores opening, while a further 197 were refurbished.

The Spar Group in South Africa bought an 80 per cent stake in BWG in 2014 for €55 million, in a deal that resulted in more than €70 million being wiped from the Irish retail group’s debt levels. Mr Crawford and the other directors, John Clohisey and John O’Donnell, retained a 20 per cent holding in the business.