Major South African retailer makes R5 billion loss

SPAR has reported a loss of R5.08 billion for its 2025 financial year due to higher financing costs linked to legacy debt from the retailer’s Poland operations.

However, the company described this as an extraordinary occurrence and said there is now a clear pathway to shareholder returns over the short to medium term.

This comes as SPAR is in the process of implementing a turnaround plan following years of decline, which included exiting some of its European operations.

On Monday, 8 December, SPAR released its results for the year ended 26 September 2025, which showed mixed results for the retailer.

SPAR’s revenue increased by 1.6% to R131.46 billion, while its cost of sales grew by 0.15% to R117.31 billion.

The company attributed its higher revenue to a stronger second-half trading performance across both Europe and South Africa.

The retailer’s operating profit declined significantly, by 25.37%, to R1.98 billion, due to higher finance costs.

SPAR’s finance costs shot up from R1.17 billion in 2024 to R1.3 billion in 2025, an 11.17% jump.

The retailer attributed this increase to legacy Poland debt assumed in South Africa, which resulted in non-deductible interest and, consequently, a higher effective tax rate.

As part of its turnaround strategy, the company disposed of SPAR Poland in 2024 for R185 million.

However, as part of this disposal, SPAR had to recapitalise the business, which was estimated at R2.7 billion, the majority of which related to settling the business’s funding debt.

This led to increased finance costs in SPAR’s 2025 financial year, which saw the retailer’s comprehensive income in 2024 swing to a loss of R5.08 billion.

In addition, the retailer’s basic earnings per share fell from earnings of 182.7 cents in 2024 to a loss of 2,507 cents per share.

However, the group’s turnaround efforts also bore some fruit in the 2025 financial year, as SPAR managed to reduce its group net debt by 40% to R5.4 billion.

SPAR said there is now a clear pathway to shareholder returns over the short to medium term.

The retailer did not declare a dividend for the 2025 financial year, saying it was prudent and in the best interest of shareholders for SPAR to continue de-gearing its balance sheet to a more sustainable level.