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Johannesburg - Spar said first half-profit jumped 22% after the food and liquor retailer acquired its Irish counterpart and sold more lower- priced own-brand products.
Net income rose to R784m in the six months through March from R643m a year earlier, Durban-based Spar said in a statement on Wednesday. That growth was more than double the 9.4% gain posted in the first six months of fiscal 2014.
The company bought BWG Group, the owner of the Spar brand in Ireland and southwest England, for R800m in August in an effort to boost growth outside its home market.
Spar has been enticing shoppers with regular discounts as consumers battle higher unemployment, increasing household debt and rising interest rates.
Own-brand goods are “paying dividends in the current environment where cash constrained consumers favor products that offer value for money,” the retailer said.
First-half revenue jumped 41% to R36.4bn, with sales from Spar-label products increasing 21% to R3.2bn.
The company raised the interim dividend 23% to R2.39 a share.
Spar rose as much as 2.5% to R195 and was trading up 0.7% as of 9:41 in Johannesburg. The stock has gained 19% this year, the best performance on the FTSE/JSE Africa Food & Drug Retailers Index.
While Spar is forecasting continued pressure on consumer spending in South Africa, the Irish retail market “continues to show encouraging signs of recovery,” the company said.
Business in the seven weeks since the end of March “has remained strong” and Spar “remains confident that it is well positioned to maintain this growth in the second half of the year.”
A plan by BWG to buy Irish convenience-store and supermarket operator ADM Londis is undergoing antitrust review after receiving shareholder approval, Spar said on Wednesday.
The company said it’s confident that the €23m deal will be completed by June.
