Spar Group, the global group which operates the fascia in Ireland and south west England, operating profit plunged 47% in its last financial year, despite strong trading performances in its Great Britain chains.
Sales in Ireland and Southwest England, which are run by franchise parner BWG Group, jumped 8.1% as the division made £773.3m over the year to 30 September.
The group said: “All retail brands [in Great Britain] delivered strong performances throughout the year, notwithstanding difficult trading conditions, including an increased regulatory environment, staff shortages, rising operating costs and consolidation in the market, with BWG Foods growing ahed of the industry and taking market share.”
BWG Group’s operating costs surged 16% for Spar Ireland and south west England due to increases in fuel, energy costs and labour costs, which increased by 15.3%.
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However, BWG Group increased its overall gross margin from 14.3% to 15.1%, driven by a change in product mix in higher gross margin impulse products such as confectionery.
In the UK, the BWG Group acquired 7 additional stores and two grocery wholesale businesses, in a bid to embark on Spar’s strategy for growth.
GlobalData retail analyst Joe Dawson said: “The group will need to focus on maintaining low prices if it is to gain market share in the UK and Ireland in coming years, as the convenience sector becomes more price competitive, for instance through the expansion of the Asda Express network.”
