Spar owner’s sales up but CEO cautious on consumer confidence
A ‘significant slowdown in growth’ due to deflationary trends in Irish grocery market
Leo Crawford (left), group chief executive, BWG Group, and Graham O’Connor, chief executive, Spar Group Ltd, with Lil Courtney, owner of three Dublin Spar shops including EUROSPAR Fairview, Spar East Wall and Spar Five Lamps.
Irish consumer confidence is “brittle” as a result of the UK’s Brexit vote, according to Leo Crawford, chief executive of BWG, which owns Spar in Ireland.
Mr Crawford was speaking following the publication of half-year figures for BWG, which also owns Londis and Mace as well as a network of British stores. BWG’s sales were up 1.6 per cent to €663 million in the six months to the end of March, while profits before tax rose by a quarter to almost €13 million.
However, Spar South Africa, the listed majority shareholder of BWG, told investors on Wednesday that BWG “experienced a significant slowdown in growth in the second quarter [January-March] across all consumer categories”.
It attributed the dip to deflationary trends in the Irish grocery market, noting that non-alcohol and food sales were down 2.6 per cent in that three-month period, while alcohol sales fell 5.2 per cent.
Mr Crawford said “one of the problems” comparatively with Q2 was that Easter had fallen in a different month in the previous year.
“October to December, our sales rose 3.4 per cent. In the second quarter they were flat. And in April and May they were up 3.2 per cent. It is really only January where they fell,” he said.
Mr Crawford added, however, that the Brexit vote and sterling’s woes had affected the value of BWG’s wholesale sales to its franchisees in the UK. He said he also believes Brexit is having a negative impact on spend at the tills in Ireland and Britain.
“Consumers are just being a little more cautious than they were a year ago. Overall I’m happy with our performance in a very competitive market, but we think consumer confidence is still brittle.”
Spar South Africa flagged that BWG is on the hunt for more retail acquisitions in Ireland. Last year, it subsumed Londis, which under BWG’s ownership has returned to growth for the first time in nine years.
It is understood that BWG is nearing an acquisition in the wholesale retailing sector, although it will not be as large as its €23 million Londis deal.
The Spar South Africa interim results also maintained an indicative value of about €55 million on the 20 per cent of the BWG group that is owned by Mr Crawford and his most senior managers.
Under the terms of its original investment two years ago, the South African group agreed a formula to buy out the 20 per cent in future, depending on BWG’s performance.