Top South African retailer kisses R10.5 billion goodbye

South African retailer Spar will lose approximately R10.5 billion in revenue from discontinued operations but will also eliminate R4.9 billion in net losses.

This was revealed in the Spar Group’s interim results for the six months ended 28 March 2025, released on Wednesday, 4 June 2025.

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

The retailer’s revenue from continuing operations dropped by 1.95% to R65.2 billion, while its cost of merchandise decreased by 2.16%.

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 CEO Angelo Swartz said they have made progress against the milestones to simplify and optimise our portfolio and strengthen our balance sheet.

 “This positions us well to harness future opportunities. Looking ahead, our focus remains on driving continued margin improvement,” he said.

One of the biggest challenges for the retailer is its international operations, which have been a drag on the company for years.

To stop the bleeding, Spar sold its retail businesses in Poland and is doing the same in Switzerland. This will have a big impact on the company’s income statement.

In its latest results, Spar Switzerland, Spar Poland and its UK subsidiary AWG (Appleby Westward Group) were classified as discontinued operations in Spar’s financials.

These three international business units reported combined pre-tax losses of R5 billion for the interim period.

Spar reported that it had already disposed of its Poland subsidiary in a deal that cost the group a significant amount of capital.

Spar Poland had liabilities exceeding its total assets by R2.1 billion in March 2024, making it technically insolvent.

Spar went into an agreement to sell Spar Poland for R185 million, which could be reduced to R93 million if certain conditions were not met.

However, before Spar could sell Spar Poland, it had to pay off all the subsidiary’s debt, cover all of its restructuring costs and cover all the expected losses for 12 months.

Spar, therefore, had to pay a maximum of R3.5 billion to cover all of these expenses before it could sell Spar Poland for R185 million. It settled the transaction in January 2025.

Spar stated that Spar Switzerland and AWG subsidiaries were classified as “held for sale” and are expecting to conclude the sale of these businesses within 12 months from classification.

Spar Switzerland is on the brink of technical insolvency, with total assets of R9.47 billion and total liabilities of R9.45 billion, only R0.02 billion less than its assets.

The discontinued operations will result in a reduction of R10.5 billion from Spar’s revenue, but will also eliminate R4.9 billion in net losses.

It remains to be seen whether Spar will be able to dispose of the Spar Switzerland and AWG subsidiaries, and if it will be as costly as in Poland.