From bad to worse for Spar

Spar said its 2026 financial year is expected to underperform 2025, as the retailer continues to face pressure in its Southern African operations.

While Spar is implementing a turnaround plan, the group said these efforts have yet to translate into sufficient earnings or cash benefits to offset that pressure.

This was revealed in an announcement that Spar posted on Monday, 28 September, in which the retailer also updated shareholders on its ongoing search for a new chairman.

Spar’s former chairman, Mike Bosman, and deputy chairman, Shirley Zinn, resigned from the company in August 2026.

Appointing the right people to fill these positions is considered a critical step toward a successful turnaround and the restoration of relations between Spar and its Guild of independent retailers.

Spar said its Nominations Committee has appointed an independent search firm to support the recruitment process for these positions.

The retailer said candidates are being assessed against a defined criteria and skills matrix, with particular focus on retail, remuneration, financial, and governance experience.

“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,” the group said. 

“The Board has also received representations from shareholders and retailer representative structures regarding potential candidates who are being assessed through the same process.”

Spar said it will aim to finalise the appointment by early November 2026.

In this announcement, Spar also provided shareholders with an update of its performance for the 48 weeks ended 28 August 2026.

Over that period, Spar’s merchandise sales revenue moderated compared with the first half of the 2026 financial year.

Its Southern African division recorded modest revenue growth, which the group attributed to subdued wholesale volumes and trading in a competitive consumer environment. 

“Consumer sentiment and consequently wholesale revenue continued to be under pressure with higher fuel, utility costs, and elevated interest rates,” the retailer said.

It added that retailer expected credit losses (ECL), specific provisions, and write-offs remained elevated in Southern Africa. 

In the first half of the 2026 financial year, Spar disclosed additional provisions in Southern Africa, mainly in its Groceries and Liquor business.

The group said this credit pressure continued after the six-month period.

Spar explained that while its net debt levels are expected to decline in the second half, elevated ECL provisions and other factors put pressure on its earnings. 

“The group expects to meet the revised covenant limits as agreed with its lenders,” it said.

Spar restoring relations with the Guild

In the meantime, Spar said its collaboration with its independent retailers, represented by the Guild, continues to improve.

“The group has made progress on the operational priorities reported at H1 FY2026,” it said.

Spar added that it is focused on “initiatives which underpin and align the retailer focus areas set out at the interim results and form part of one integrated recovery plan rather than separate workstreams.” 

“These include merchandising and pricing, marketing effectiveness, SPAR2U, retailer technology, and profitability,” the retailer said. 

In order to repair relations with the Guild, Spar wholesaler executives and Guild representatives spent two days together in KwaZulu-Natal in working sessions.

“Retailers and the group exchanged views transparently, worked through practical obstacles, and agreed on shared accountability,” Spar said.

Restoring relations with the Guild is considered critical to Spar’s turnaround, as the group’s wholesale model makes it highly dependent on these independent retailers.

“The group will continue to work through the Guild and formal governance structures on the commitments arising from this work,” Spar said. 

“The relationship will be strengthened by consistent delivery and improved retailer outcomes, while difficult issues continue to be addressed directly.”

“Overall progress will be assessed against wholesale growth, operating margin, retailer profitability, service levels, overdue debt, cash generation, and leverage.” 

Spar’s management team expects the financial benefits of its ongoing turnaround to build over the 2027 financial year, with full execution and embedment likely to extend beyond that period.