Spar, a leading wholesaler, has announced that its turnaround efforts have yet to deliver the desired results, with the company continuing to face significant pressure in its Southern African business. Despite being in turnaround mode since 2023, the company has not seen meaningful benefits to offset the challenges it faces. Spar has made several board and management changes over the past three years in an effort to stabilise the business and rebuild retailer trust.
The company's share price has continued to deteriorate, suggesting that investors remain unconvinced by the pace and progress of the turnaround. Spar's operational improvements are underway, but have not yet yielded sufficient financial gains. The company expects its 2026 financial year to underperform 2025, with the pressure concentrated in its Southern African Groceries & Liquor business. Management's immediate priority is to improve profitability and cash generation in Southern Africa while maintaining support for retailers.
Spar has appointed an independent search firm to help identify a new chair and additional independent nonexecutive directors, with the appointments expected to be finalised and announced by early November. The board changes come as Spar continues to address weak trading and financial pressure in Southern Africa. The company has been under pressure from its independent retailers, which culminated in the departures of former chair Mike Bosman and independent nonexecutive director Shirley Zinn.
For the 48 weeks ended August 28, Spar's revenue from merchandise sales moderated from the interim period, while Southern African wholesale volumes and trading remained subdued. Retailer-expected credit losses, provisions, and write-offs also remained elevated. The company said credit pressure, particularly in groceries and liquor, had continued after its interim results. Spar's net debt is expected to be lower than at the half-year stage, while lenders remain supportive.
The operational turnaround includes changes to pricing, product ranges, promotions, distribution, retailer technology, marketing, and private-label products. Spar said non-performing corporate stores were being turned around, closed, or disposed of, with a number expected to be exited during 2026. The company has also completed repairs to the flooring at its KwaZulu-Natal distribution centre and exited a temporary overflow facility.
Spar's relationship with independent retailers is now improving, with executives and representatives of the retailers' guild recently holding two days of working sessions in KwaZulu-Natal. The parties have agreed on shared accountability and will continue working through formal governance structures. The group will measure progress through wholesale growth, operating margins, retailer profitability, service levels, overdue debt, cash generation, and leverage.
Spar CEO Reeza Isaacs has stated that the executive team's priorities remain unchanged despite the board changes. The company is now asking shareholders to assess the turnaround against actual delivery rather than the changes in the boardroom. Spar expects to release its full-year results on December 4, which will provide further insight into the company's progress.
Key points
- Spar's turnaround efforts have not yet delivered meaningful benefits.
- The company expects its 2026 financial year to underperform 2025.
- Spar has appointed an independent search firm to help identify a new chair and additional independent nonexecutive directors.
