The retailer is pessimistic about its performance in 2026.
Picture: Spar website
Spar Group has told investors it expects its 2026 financial performance to underperform 2025’s. This comes as the retailer continues to face pressure in Southern Africa, particularly in its groceries and liquor division.
In a note to shareholders released on Monday, the retailer said: “Operational improvements have not yet translated into sufficient earnings or cash benefits to offset that pressure.”
The retailer assured shareholders that the management’s immediate priority is to improve profitability and cash generation in Southern Africa while maintaining appropriate levels of support for retailers.
Spar’s performance in 2025
For 2025, Spar reported a loss of R5 billion. The financial hit came almost entirely from discontinued international operations, as it pulled out of Europe, including offloading its businesses in Poland, Switzerland, and the UK (Appleby Westward Group).
The retailer’s continuing operations in South Africa and Ireland remained operationally profitable, recording a profit of R1.1 billion, but this was completely overshadowed by impairments, writedowns, and restructuring costs tied to the European exits.
As part of this major clean-up year and turnaround strategy, the retailer cut its total net debt by 40% to R5.4 billion.
What 2026 might look like
The retailer said for the 48 weeks ended 28 August 2026, group revenue from the sale of merchandise moderated from the interim period, with Southern Africa recording modest revenue growth as wholesale volumes and trading remained subdued in a competitive consumer environment.
“Consumer sentiment and, consequently, wholesale revenue continued to be under pressure, with higher fuel and utility costs and elevated interest rates.”
Spar expects group net debt levels to reduce versus the first half of the year.
“Debt levels continue to improve with lenders remaining supportive of the group. Whilst overall debt levels have reduced, elevated expected credit loss provisions and other impacts have increased pressure on earnings in Southern Africa. The group expects to meet the revised covenant limits as agreed with its lenders.”
Future of Spar board
The retailer has recently dealt with resignations from its chair Mike Bosman and deputy chair Shirley Zinn. The two resigned with immediate effect, citing personal attacks, hostility and, at times, threats from “certain current and former Spar retailers and former employees”.
Updating on filling these positions, the retailer said an independent search firm has been appointed to support the recruitment process. It aims to have the positions filled by early November 2026.
“As part of this process, the board has identified individuals of high-calibre whose skills and experience, it believes, could make an invaluable contribution to the business and its turnaround.”
Turnaround strategy
The retailer also provided an update on its turnaround strategy. It said the collaboration with its independent retailers continues to improve, with a greater focus on shared operational and commercial priorities.
“Pricing, range and category optimisation initiatives are under way, with stronger monitoring of key-value items and retailer profitability. Promotional disciplines have been tightened, with clear return thresholds and close retailer alignment. Improved distribution efficiency, focused on cost-per-case benchmarking, productivity, inbound and outbound service metrics and fleet utilisation.”
In addition, Spar’s non-performing corporate stores are being turned around, closed or disposed of, with a number expected to be exited during calendar 2026.
