Major South African retailer set to exit England and Switzerland

SPAR expects its headline earnings per share from total operations to decline by between 24% and 34% year-on-year when it releases its results on 4 June. 

The numbers are better when the company’s discontinued operations in Switzerland and AWG in England are stripped out. It expects a decline in headline earnings per share of between 0% and 10% year-on-year. 

SPAR revealed this in a trading statement on 29 May, where the company also said its board has approved an amendment to its financial reporting framework to adopt a traditional 52/26 week reporting period. 

The trading statement outlined the progress SPAR has made in reviewing its European operations, following the sale of its underperforming Polish business last year. 

In particular, the company was reviewing its Swiss business and Appleby Westward Group (AWG), which operates in South West England, to determine whether it can improve its performance or if SPAR should look to dispose of these businesses. 

In the trading statement, SPAR revealed that it is looking to divest from SPAR Switzerland and AWG. As such, these businesses are considered assets for sale and are classified as discontinued operations. 

With respect to AWG, SPAR said it is in exclusive negotiations with an established business in the United Kingdom, which will be well-placed to grow AWG in England. 

In Switzerland, the company has been engaging with several parties with business interests in the region and has experience operating European food retailers. 

SPAR said its approach has been to engage parties whose interests align with the growth ambitions of the local management teams and retailer partners, and will ensure continuity for employees, suppliers and customers.

With these businesses classified as discontinued operations, SPAR said it expects its headline earnings per share to be flat year-on-year or decline by a maximum of 10%. 

On a comparable basis, using the company’s new reporting period, it expects headline earnings per share to be between 5% higher year-on-year or 5% lower. 

The expected changes can be seen in the table below. 

SPAR said this performacne was largely driven by its Southern African groceries and liquor business, which is expected tod delivery modest top-line growth. 

The operating profit of this business remains solid, the company said, with its KwaZulu-Natal distribution centre continuing on its positive trajectory following a botched software implementation. 

This performance, together with continued focus on cost discipline, translated into modest operating margin expansion on a comparable basis.

SPAR’s Irish delivered a resilient performance in a challenging trading environment, supported by improved gross profit and operating margins in local currency terms, as well as reduced interest expenses driven by lower gearing. 

Adverse foreign currency translation effects on consolidation partially offset these gains.

The company also took total impairments of approximately R4.2 billion, which were recognised, including R3.0 billion in Switzerland and R1.2 billion in AWG during the period. 

The impairments take into account the fair value of the disposal groups less the costs to sell. 

Additionally, the divestment of the Polish business, which was concluded in January 2025, resulted in a loss on disposal of R531 million in the interim period. 

This loss has been recognised in relation to the sale of the Polish operation and takes into account the satisfaction of certain suspensive conditions that were pending at the reporting date but have since been fulfilled, enabling completion of the disposal. 

The fulfilment of these conditions resulted in the final adjustments to the disposal proceeds and associated costs, and there have been no further cash outflows since the disposal became wholly unconditional and was implemented on 31 January 2025.

SPAR said it made substantial progress in strengthening the balance sheet, successfully refinancing its South African and Swiss facilities, improving liquidity and reducing funding costs. 

It anticipates that the successful completion of the aforementioned divestments will materially deleverage and strengthen the balance sheet further.

The table below shows the expected financial performance of the company based on its total operations, including the Swiss business and AWG.