Spar delivers blow to investors
The retailer is pessimistic about its performance in 2026.
Spar Group has informed investors that it anticipates its 2026 financial performance to lag behind 2025’s results. This news arrives amid ongoing challenges for the retailer, especially in its groceries and liquor segment across Southern Africa. In a note sent to shareholders on Monday, the company stated that "operational improvements have not yet yielded enough earnings or cash benefits to counteract this pressure."
Management emphasized that the top priority remains enhancing profitability and cash flow in Southern Africa, while providing adequate support to retailers. In 2025, Spar reported a loss of R5 billion, a significant portion stemming from the discontinuation of international operations, including the sale of its European businesses in Poland, Switzerland, and the UK.
Despite this setback, the company's ongoing operations in South Africa and Ireland remained profitable, with a profit of R1.1 billion. However, this profit was significantly offset by impairments, writedowns, and restructuring costs associated with the European exits. As part of its turnaround plan, Spar reduced its total net debt by 40% to R5.4 billion.
For the 48 weeks leading up to 28 August 2026, group revenue from merchandise sales showed slight improvement compared to the previous period. However, Southern Africa experienced modest revenue growth due to subdued wholesale volumes and increased competition. Higher fuel and utility costs, along with elevated interest rates, continued to pressure consumer sentiment and wholesale revenue.
Spar expects to decrease its group net debt levels compared to the first half of the year, despite increased pressure on earnings due to higher expected credit loss provisions and other impacts. The retailer expects to meet revised covenant limits agreed with lenders.
The board has recently seen resignations from its chair, Mike Bosman, and deputy chair, Shirley Zinn, who left due to personal attacks, hostility, and threats from some current and former Spar retailers and employees. The company is conducting an independent search to fill these positions and aims to have replacements in place by early November 2026. The board has identified high-caliber candidates who could contribute significantly to the business turnaround.
Spar also updated investors on its turnaround strategy, highlighting the improved collaboration with independent retailers, focused on shared operational and commercial priorities. They are currently working on pricing, range, and category optimization, as well as tighter promotional disciplines. The retailer is also streamlining distribution efficiency through cost-per-case benchmarking, productivity, inbound and outbound service metrics, and fleet utilization.
Finally, the company is turning around non-performing corporate stores, either closing or disposing of them, with several exits expected in 2026.
Written by urgent.news from The Citizen's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
