Major South African retailer kisses R5 billion goodbye

SPAR expects its earnings to decline substantially in its 2025 financial year, as the retail giant recognised over R5 billion in impairments.

However, the company’s operational performance is showing some improvements, with the retailer started to reap the rewards of its European exits.

SPAR is one of South Africa’s major food retailers, seated among competitors like Shoprite, Pick n Pay, and Woolworths.

SPAR has come under significant pressure in recent years, which has necessitated a turnaround plan, including exiting some of the retailers’ European operations. 

On Friday, 21 November, SPAR released a trading statement for the 52 weeks ended 26 September 2025.

This statement revealed that SPAR expects its earnings to take a significant hit in the 2025 financial year, with earnings per share from continuing operations expected to fall by between 40% and 50% compared to 2024.

In addition, SPAR’s headline earnings per share from continuing operations are expected to be lower by between 7.5% and 12.5%.

The retailer attributed these declines to two factors, namely significant impairments recognised in the year and SPAR Poland exit financing costs.

These impairments are due to a change SPAR implemented in terms of how it evaluates the value of its stores. 

In the second half of the 2025 financial year, the retailer decided to start recognising each of its corporate-owned stores as a separate cash-generating unit.

Previously, SPAR would group many of its stores together when assessing for impairments.

This change led to SPAR recognising more impairments related to goodwill and right-of-use assets, around R0.6 billion, contributing to the decline in earnings per share.

In addition, the retailer’s investment in UK-based Appleby Westward Group, which is now a discontinued operation, was further impaired, to the tune of around R1.6 billion.

SPAR Switzerland, which was disposed of in the 2025 financial year, added another R3 billion impairment.

In total, SPAR recognised R5.2 billion in impairments in its 2025 financial year.

The second factor that contributed to SPAR’s lower earnings in 2025 was its SPAR Poland exit financing costs, which increased the group’s net financing costs by about 20%.

Positively, SPAR said its revenue growth improved over the second half of the year compared to the first half, and its gross profit margin improved year-on-year.

Despite the higher net financing costs, SPAR also managed to reduce its net debt by 40% in 2025, from R9.1 billion to R5.4 billion.

This was made possible by stronger cash generation and the proceeds from the sale of SPAR Switzerland.

“The disposals of SPAR Poland and SPAR Switzerland have enhanced the group’s financial strength, provided flexibility and enhanced management’s focus on supporting its strategic priorities,” the retailer said.

“The group is committed to resuming returns to shareholders over the short to medium term, either in the form of dividends and/or share buybacks.”

“The group’s financial position has improved significantly over the past 12 months, and a stronger balance sheet, improved cash generation profile and continued disciplined capital allocation will support this next phase of transformation and growth.”