Spar Group has informed investors that its 2026 financial performance is expected to underperform 2025's due to ongoing pressure in Southern Africa, particularly in its groceries and liquor division. The retailer attributed the pressure to operational improvements that have not yet translated into sufficient earnings or cash benefits. Spar assured shareholders that improving profitability and cash generation in Southern Africa is the management's immediate priority.
In 2025, Spar reported a loss of R5 billion, primarily due to discontinued international operations as it exited Europe, including Poland, Switzerland, and the UK. However, the retailer's continuing operations in South Africa and Ireland remained operationally profitable, recording a profit of R1.1 billion. This was overshadowed by impairments, writedowns, and restructuring costs tied to the European exits.
As part of its major clean-up year and turnaround strategy, Spar reduced its total net debt by 40% to R5.4 billion. The retailer expects group net debt levels to reduce versus the first half of the year, with lenders remaining supportive of the group. Spar anticipates meeting the revised covenant limits as agreed with its lenders.
For the 48 weeks ended 28 August 2026, Spar's group revenue from the sale of merchandise moderated from the interim period, with Southern Africa recording modest revenue growth. Wholesale volumes and trading remained subdued in a competitive consumer environment, with consumer sentiment under pressure due to higher fuel and utility costs and elevated interest rates.
The retailer has recently dealt with resignations from its chair Mike Bosman and deputy chair Shirley Zinn, who cited personal attacks, hostility, and threats from certain current and former Spar retailers and former employees. An independent search firm has been appointed to support the recruitment process, aiming to fill the positions by early November 2026.
Spar provided an update on its turnaround strategy, which includes collaboration with independent retailers to improve shared operational and commercial priorities. The retailer is focusing on pricing, range, and category optimisation initiatives, with stronger monitoring of key-value items and retailer profitability. Promotional activities are also underway to boost sales.
Spar's management is working to address the challenges facing the retailer, with a focus on improving profitability and cash generation in Southern Africa. The retailer aims to maintain appropriate levels of support for retailers while navigating the competitive consumer environment. Key priorities include reducing debt levels, improving operational efficiency, and enhancing collaboration with independent retailers.
Key points
- Spar's 2026 financial performance is expected to underperform 2025's due to ongoing pressure in Southern Africa.
- The retailer reduced its total net debt by 40% to R5.4 billion as part of its major clean-up year and turnaround strategy.
- Spar's management is prioritising improving profitability and cash generation in Southern Africa, with a focus on pricing, range, and category optimisation initiatives.
