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Spar to enter Middle East market

Jan 28 2013 11:36 Reuters

Company Data

THE SPAR GROUP LIMITED [JSE:SPP]

Last traded 0
Change 0,7
% Change 0
Cumulative volume 1091128
Market cap 22.30bn

Last Updated: 31-10-2014 at 04:29. Prices are delayed by 15 minutes. Source: McGregor BFA

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Abu Dhabi - Dutch food retailer Spar International plans to enter the Middle East, aiming to have 30 stores in the region by the end of 2015, its managing director said on Sunday.

The company, which says it has over 12 000 stores worldwide and also has stores across South Africa, will have eight stores in Abu Dhabi, two in Qatar and one in Lebanon by the end of this year, Gordon Campbell told Reuters.

Spar plans to expand further in the United Arab Emirates and is also looking at entering Oman and Saudi Arabia over the next three years, he added.

"Our focus will be on a range of fresh foods and the convenience of food to go and food to stay, with a seating area in the compact stores," he said.

The UAE, where expatriates far outnumber local citizens, already has international retailers such as Carrefour and Geant as well as locally developed brands such as Lulu, so competition is intense. But Campbell said there was still room for growth.

"Wherever we go, they say the market is saturated. The reality is the food market is evolving always with new ideas and concepts," he said.

Spar's unique selling point will be its convenience stores and large supermarkets of around 1,800 square metres; other retailers in the region have focused on hypermarkets with sizes of around 10,000 square metres, Campbell said.

The Dutch firm is partnering with Abu Dhabi Cooperative Society, a local retailer, for its Middle East entry and expansion.

Spar expects its Middle East operations to generate revenues of over $1bn in five to ten years, Campbell said. The company expects its global turnover to have hit $43bn in 2012, up 4.5% over the prior year, he added.

In its most recent annual report the retailer said South Africa was now the second-largest Spar country as well as being the major Spar presence on the continent.

Austria and Norway are its biggest European markets in terms of revenue while Australia, South Africa and China are major markets.

Last year the retailer reported full-year earnings that fell short of market expectations for its South African business. Diluted headline earnings rose 9.3% in the year to end-September, to 571 cents per share.

Revenue grew to R43.5bn from the previous period’s R38.8bn and turnover increased 12.2% to R43.2bn. The group declared an annual dividend of 430 cents per share‚ a 14.1% rise from the previous period’s dividend.

By the end of 2015, Spar projects worldwide turnover will hit $50bn as it expands into new markets.

Spar shares were down 0.37% to R121.50 in early trade on the JSE.  

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