SPAR can’t catch a break

Despite ongoing turnaround efforts, SPAR’s finances continue to struggle, with the retailer set to report an up to 65% decrease in its earnings from continuing operations.

On Friday, 29 May, SPAR released a trading update outlining its performance for the 26 weeks to 27 March 2026.

The group explained that its Southern Africa Groceries and Liquor revenue growth came under pressure in the period, remaining below selling inflation and lower than food CPI, at 1.1%.

Positively, SPAR’s Health business performed well, growing revenue by 1.3% and 26.1%, respectively. Its Irish operations also recorded a stronger performance, with revenue up 3.4%.

However, this is where the good news ended, as SPAR’s Build It business also saw lacklustre revenue growth of 1.3%.

Based on this, SPAR expects to report a significant decline in its earnings (EPS) and headline earnings per share (HEPS) from continuing operations, with the following declines expected:

• EPS down 65% to 55%
• HEPS down 60% to 50%

The retailer attributed these declines to several factors, including margin compression in Southern Africa, though this was partially offset by a positive contribution from Ireland.

In Southern Africa, SPAR’s gross profit margin declined by between 20 and 40 basis points, largely attributable to higher Black Friday promotional subsidy spend and underperformance at its KwaZulu-Natal distribution centre.

The group said above-inflation cost growth and elevated debtor impairments in its Southern Africa Groceries & Liquor division contributed to the substantial decline in operating profit.

In addition, the group saw impairments of historical asset carrying value, totalling around R128 million, and a more conservative approach to debtors provisioning.

SPAR’s debtor impairments increased over the period, as well as its net debt. The group said this was expected due to higher working capital investment and the timing of Easter.

In the prior period, SPAR made significant inroads in reducing its debt as part of the retailer’s turnaround strategy, which involved exiting many of its European operations.

SPAR explained that debtor risk remains a key area of focus and that its debt levels are expected to reduce through the second half of the financial year.

In light of its weak performance over the 26-week period, SPAR said it has identified and is executing a set of structural initiatives to realign its cost base and improve operating leverage over time.

“SPAR enters H2 FY2026 with a cleaner balance sheet and a more focused geographic footprint,” it said. 

“The executive team has been refreshed with new appointments having been made, but recovery will take time, and the macroeconomic backdrop remains demanding.” 

“The near-term priorities include addressing key retailer issues, improving the quality and consistency of earnings, and continuing to build the foundation for sustainable recovery.”

SPAR CEO Reeza Isaacs said the retailer’s planned exit from the UK is now firmly underway, allowing the group to focus its attention on Southern Africa and Ireland.

He said the group is focusing on the discipline in execution and a “back to basics” approach to supporting its retailers, which is critical to delivering a sustained recovery.

“We believe in the independent retailer model and have a path to sustainable recovery,” Isaacs said. 

“The areas we are addressing now are about making the SPAR model work better in practice – giving our retailers the confidence and tools they need to compete.” 

“Rebuilding the SPAR brand will take time, but the team and initiatives we have put in place are starting to bear fruit.”

SPAR’s interim results for the first half of its 2026 financial year are set to be released on 10 June.