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SPAR suspends investments in Hungary due to new legislation

Deals

A recent tax law has hit foreign supermarket and hypermarket chains in Hungary the hardest including Austrian-owned SPAR, and is compounded by brand new legislation enforcing mandatory closure of shops on Sunday, passed on December 16 – a law which seems to favor smaller local and franchised grocery chains.

Present in Hungary for 23 years, SPAR is Hungary’s fifth largest employer with 13,000 employees and investments reaching €500 mln thus far. SPAR said it was not considering leaving Hungary, but with the introduction of the new legislation, it would suspend most of its planned and ongoing investments to the tune of €59 mln.

The 600 additional jobs the investment would have created will also not come to fruition. It did say, however, that it will carry out investments already in progress including the opening of three stores in Budapest, Reuters reported on Wednesday. SPAR Hungary's chief executive Gabriella Heiszler said the current investment has now been reduced to 25 mln, less than half the amount originally planned. 

With regards to Sunday closures, Heiszler said she is against the new legislation. “Hungarians don’t shop as a past time: The current standard of living doesn’t allow for that. If the legislation is passed, traffic will likely concentrate on other days.” That said, Sunday sales at SPAR only account for 8% of weekly turnover and as such the forced closure is not expected to affect sales in any significant way, Heiszler added.

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