Major South African retailer feels the pain

Despite significant efforts made towards its turnaround plan, Spar recorded a significant loss for the first half of its 2025 financial year.

Spar released its results for the 26 weeks ended 28 March 2025 on Wednesday, 4 June, which revealed a poor financial situation.

The retailer’s revenue from continuing operations dropped by 1.95%, while its cost of merchandise decreased by 2.16%. 

The company’s operating profit fell by 5.7% to R1.35 billion, but Spar made a total comprehensive loss of R4.0 billion, down over 9,700% from the R41.6 million profit it made the previous year.

Spar’s basic earnings per share also swung into a loss this period, going from earnings of 29.5 cents per share to a loss of 2,211.1 cents, down 7,595.3%.

These results come primarily due to the group’s discontinued operations, which lost R5.03 billion in the six-month period.

The discontinued operations include Spar’s Swiss and UK operations, which were recently classified as discontinued as part of the retailer’s turnaround plan.

As part of Spar’s plans to stabilise the business and lay the foundation for future growth, it identified several key focus areas: exiting Poland, restructuring group debt, completing a strategic review of its European operations, and further rolling out the SAP system.

The group also aims to improve its Southern Africa EBIT margin to 3% and attain a leverage ratio of 1.5 to 2.0 times by the end of FY2026.

So far, Spar has made impressive progress on these goals, having achieved three of its five milestones.

The retailer concluded the disposal of SPAR Poland was in January 2025, and the group’s debt restructuring was completed in March 2025.

In May 2025, the group also announced its intention to dispose of its operations in Switzerland as well as AWG in the United Kingdom. 

“This decision follows a comprehensive assessment of the group’s capital allocation priorities, long-term strategic focus and the structural and operational dynamics of these businesses,” the retailer explained. 

“The board of directors of the company believes that divestment aligns with SPAR’s strategy to focus on its core Southern African and Irish operations.”

From a segmental performance, Spar’s Southern African operations achieved marginal growth in this six-month period.

Wholesale turnover increased by 1.7%, while combined grocery and liquor wholesale revenue rose by 1.1%.

Retail revenue increased by 1.9%, like-for-like up 1.6%, in a difficult trading environment affected predominantly by lower food inflation, Mozambique post-election unrest, the timing of Easter falling in the second half of the current year and store closures in Gauteng. 

Spar explained that its growth remained strong in the lower-income customer segments, while the middle and upper segments’ performance lagged the market. 

Positively, the group’s on-demand shopping app, SPAR2U, demonstrated significant progress with a 174% increase in delivery volumes and broad network coverage. 

In addition, ongoing cost and margin improvements contributed to an EBIT margin expansion in Southern Africa, with significant advancements noted at Spar’s KwaZulu-Natal distribution centre.

Spar did not declare an interim dividend for this six-month period but said it will reconsider this decision based on future macroeconomic and operating conditions.