Retail group SPAR expects its 2026 financial performance to come in below the previous year, with continued pressure on its Southern African operations, particularly its groceries and liquor business.
In a voluntary update released on Monday, the retailer said operational improvements had not yet translated into sufficient earnings and cash benefits to offset the pressures facing the business.
SPAR said revenue from merchandise sales had moderated since its interim reporting period. For the 48 weeks to 28 August 2026, revenue growth in Southern Africa remained modest as wholesale volumes and trading were subdued in a competitive consumer environment.
The company attributed continued pressure on wholesale revenue partly to consumer sentiment, higher fuel and utility costs, and elevated interest rates.
SPAR said retailer expected credit losses, specific provisions and write-offs also remained elevated in Southern Africa, particularly in its Groceries and Liquor operations.
The company has yet to provide a forecast for its earnings per share and headline earnings per share. It said this guidance would be issued once the board had reasonable certainty, in line with JSE listing requirements.
Boardroom changes
The latest financial update follows a period of leadership changes and tensions involving SPAR and its independent retailers.
SPAR's chairman Mike Bosman and deputy chair Shirley Zinn resigned with immediate effect on 17 August. Lwazi Koyana was appointed interim chairman while the company began a process to appoint a permanent chairperson and additional non-executive directors.
SPAR said its Nomination Committee has appointed an independent search firm to assist with the recruitment process. The board aims to announce the new chairperson and additional non-executive directors by early November.
The company said candidates are being assessed against a defined skills matrix, including retail, remuneration, financial and governance experience.
Relationship with independent retailers
SPAR operates through a network of independent retailers, with the relationship between the group and the SPAR Guild having been under pressure.
The company said collaboration with independent retailers has improved, with greater emphasis on shared operational and commercial priorities.
SPAR executives and Guild representatives recently held two days of working sessions in KwaZulu-Natal to discuss priorities for retailers and the wholesaler.
The group said the relationship would continue to be managed through the Guild and formal governance structures, with both sides focusing on improving retailer outcomes.
Turnaround measures
SPAR said its turnaround programme includes measures aimed at improving margins, efficiency and retailer profitability.
These include tighter promotional controls, closer monitoring of key-value items, improved distribution efficiency and the turnaround, closure or disposal of underperforming corporate stores.
In KwaZulu-Natal, SPAR said it had completed repairs to the flooring at its distribution centre and exited a temporary overflow facility, reducing additional lease costs.
The company said month-on-month gross margin improvement had been recorded in the province, while KZN remained a key focus of its recovery efforts.
SPAR also said its SAP finance deployment was now live and stable at its central office and four distribution centres.
The group expects the financial benefits of these initiatives to build progressively through its 2027 financial year, with full implementation likely to extend beyond that period.
SPAR said its net debt levels are expected to be lower than at the end of the first half of the year and that it expects to meet revised covenant limits agreed with its lenders.
The group's 2026 annual results are expected to be released on or around 4 December 2026.