A turnaround is meant to pay for itself eventually, and on Monday Spar told shareholders that eventually is not this year. Its 2026 financial year is expected to come in behind 2025, because the fix has not yet produced enough earnings or cash to offset the pressure on its Southern African business. The warning came with an update on the 48 weeks to 28 August.
Spar is, at heart, a wholesaler. Its model leans heavily on the independent retailers in its Guild, who buy their stock from it. That means it gets squeezed twice: once when shoppers pull back, and again when the retailers it supplies struggle to pay.
Squeezed at the till and on the invoice
The shopper side is the familiar one. Spar said higher fuel and utility costs, along with interest rates that are still high, kept consumers under pressure, and wholesale revenue went with them. Its Southern African division grew revenue only modestly, on weak wholesale volumes in a competitive market, and sales slowed compared with the first half of the year.
The retailer side is closer to home. Money owed to Spar by its own retailers keeps going bad: the amounts it expects never to recover, the provisions it has set aside for specific debts and the write-offs all stayed high in Southern Africa. That is on top of the extra provisions Spar disclosed in the first half, mostly in its groceries and liquor business. Spar expects its net debt to come down in the second half, but those provisions, among other things, are still weighing on earnings.
A new chair and a patch-up with the Guild
The other half of the fix is people. Chair Mike Bosman and deputy chair Shirley Zinn both resigned in August, and filling their seats is seen as a critical step for the turnaround and for mending relations with the retailers. An independent search firm is running the process, the board is also weighing names put forward by shareholders and retailer groups, and Spar aims to settle the appointment by early November. In mid-September, Moneyweb reported that the Guild was backing Phil Roux for the job.
Spar says that relationship is already improving. Its wholesale executives and Guild representatives spent two days together in working sessions in KwaZulu-Natal.
Management expects the financial benefits to build over the 2027 financial year, with the full job likely running past that. Until then, Spar says it expects to stay within the revised borrowing limits it agreed with its lenders.
