Retail giant SPAR has returned to profitability after reporting a profit of R147.3 million for the six months ended 27 March 2026, a significant turnaround from the R4.2 billion loss recorded during the same period last year. However, the group's latest financial results highlight ongoing operational challenges that continue to weigh on performance.
In its interim results, SPAR said it faced considerable pressure during the reporting period, citing underperformance in KwaZulu-Natal, an ineffective Black Friday campaign that failed to generate an adequate return on investment, and lingering balance sheet clean-up efforts.
New Group CEO Reeza Isaacs acknowledged the difficulties facing the retailer but expressed confidence that the issues can be resolved.
"These are not market problems; they are execution problems, and they are fixable," said Isaacs.
He added that the company had allowed its cost base to grow faster than revenue and had not prioritised retailer profitability sufficiently.
Revenue from continuing operations increased by 3.6% to R67.5 billion. Despite the revenue growth, profit from continuing operations declined sharply from R768.1 million in the first half of 2025 to R291.7 million in the current reporting period.
The group's overall return to profitability was largely aided by a substantial reduction in losses from discontinued operations. SPAR has exited its businesses in Poland and Switzerland and is in the process of selling its United Kingdom operations. These businesses recorded losses exceeding R5 billion in the prior period due to significant write-downs. In the latest results, losses from discontinued operations were reduced to R144.4 million.
As a result, total profit attributable to shareholders improved from a loss of R4.2 billion to a profit of R147.3 million, while basic earnings per share increased from a loss of 2,610 cents to a profit of 76.5 cents.
However, headline earnings per share, a key measure that excludes one-off and non-operational items fell by 53.9% to 123.6 cents per share, reflecting the group's ongoing operational challenges.
Isaacs, who previously served as an executive at Woolworths, is spearheading a recovery strategy focused on strengthening retailer performance. The company has intensified engagement with independent retailers and the National Guild to address concerns more effectively and improve business outcomes.
The turnaround plan is built on five key priorities, including stronger procurement practices, more effective marketing and brand management, modernised retail systems, streamlined operational processes, and initiatives aimed at improving retailer profitability.
SPAR also plans to reposition its SPAR2U platform to provide a more personalised shopping experience through investment in new technology and expanded digital partnerships.
In KwaZulu-Natal, where performance has been under pressure, the retailer reported encouraging signs of recovery. A structured stabilisation programme helped restore three consecutive months of operating profit by the end of the reporting period, while stock availability improved significantly.
The introduction of a new local perishables model has also boosted product availability and contributed to revenue growth. The company said new leadership appointments have been made across its Merchandise, Finance and Retail Operations divisions.
While SPAR has exited several international markets, it will retain its Irish business, BWG Foods. The operation delivered solid results, with sales increasing by 2.2% to €855.7 million and gross margins showing improvement.
The retailer also highlighted positive early indicators from its recovery efforts. Gross profit growth turned positive in February and March, service levels in KwaZulu-Natal improved, and SPAR Health reported growth of 26%.
Meanwhile, the SPAR Rewards loyalty programme continued to expand, with sales increasing by 9.3% year-on-year. The programme now boasts 12.8 million registered cards, with members spending significantly more per transaction than non-members.
Isaacs stressed that the company's turnaround would take time and would be measured by sustained operational improvements and stronger retailer performance.
"Recovery will not be defined by a single reporting period. It will be defined by consistent operational improvement, stronger retailer outcomes and visible progress over time," he said.
"We believe in the independent retail model because it offers local relevance that other retail chains cannot match."