Recasts with growth initiatives and adds CEO comments

By Nqobile Dludla

JOHANNESBURG, June 4 (Reuters) - South African supermarket retailer SPAR Group SPPJ.J is looking to broaden its produce range, expand its on-demand delivery service and sell more own-brand goods after first-half results showed flat revenue and a small decline in earnings.

South Africa's grocery sector has become increasingly competitive as price-conscious consumers look for value, convenience and distinctive products.

Market leader Shoprite SHPJ.J and premium food leader Woolworths WHLJ.J are keeping rivals on their toes as they continue to grab market share.

SPAR Group CEO Angelo Swartz told investors that the group's growth prospects in Southern Africa were grounded in boosting its product range, leveraging its partnership with Uber Eats, and selling more private-label goods, offering customers quality and affordability, while building brand loyalty.

The group is also stepping up investment in customer convenience, with the continued rollout of on-demand digital platforms.

Investments in pharmacist training facilities are underway as well to support the growth of SPAR Health, with the aim of doubling the pharmacy network by 2028, it added.

"Our focus is firmly on returning to growth but doing so without sacrificing margin or sustainability," Swartz said, adding that the retailer was "operating in an undeniably challenging environment".

Headline earnings per share from continuing operations fell 0.4% to 450.1 cents in the 26 weeks ended March 28.

Group revenue from continuing operations remained steady at 66.1 billion rand ($3.70 billion).

Group operating profit increased 1.6% to 1.5 billion rand, supported by improved cost discipline, with its operating margin stable at 2.2%.

In Southern Africa, wholesale turnover increased 1.7% to 49.9 billion rand, reflecting the ongoing pressure on consumer spending. Combined grocery and liquor wholesale revenue rose 1.1%, while retail revenue increased 1.9%, with like-for-like sales up 1.6%.

Growth was underpinned by strong momentum in the lower-income customer segment, the retailer said.

SPAR Switzerland and its UK businesses, which are up for sale, recorded aggregate post-tax losses of 4.4 billion rand, including impairments of 4.2 billion rand, the retailer said.

($1 = 17.8637 rand)

(Reporting by Nqobile Dludla. Editing by Louise Heavens and Mark Potter)

((nqobile.dludla@thomsonreuters.com; +27103461066;))