Spar Group is decoupling its SAP finance migration from warehouse operations as it navigates a R168.7-million lawsuit from a major franchisee.

In a Monday (23/02/2026) trading update, the retailer said the revised SAP approach will focus first on “capability enablement” rather than linking finance, purchasing, and distribution systems at the same time. The initial plan had integrated these elements simultaneously, but Spar now aims to reduce execution risks by separating them.

The finance migration to a single SAP platform with a unified chart of accounts is expected to be completed in the current financial year. This phase will establish “a single version of financial data” and improve efficiency and governance. Later stages will address drop shipment reporting, credit management, and pricing oversight.

The SAP overhaul comes amid major leadership changes at the group. CEO Angelo Swartz resigned on 20 February after 28 months in the role, with CFO Reeza Isaacs stepping into the CEO position on 1 March. COO Megan Pydigadu will assume the CFO role. Swartz, who previously led Spar’s KwaZulu-Natal operations, had described the SAP rollout as “the single biggest risk” to the group’s recovery.

The company’s KwaZulu-Natal SAP implementation in early 2023 was widely considered a failure. According to reports, the Giannacopoulos family—a key franchisee—has filed a R168.7-million lawsuit in Durban High Court, claiming supply chain breakdowns caused empty shelves, lost customers, and missed rebates across 46 Spar, SuperSpar, and Tops stores. The family is seeking R142.9-million in lost gross profit for 2023–2025 and R25.8-million in rebate-related damages. Industry estimates place the total cost of the failed rollout at roughly R1.6-billion in lost revenue and R720-million in lost profit by September 2023.

Spar confirmed it has been served with a summons. It noted that all other KwaZulu-Natal retailers affected during the initial rollout, except the Giannacopoulos family and one other, have reached settlements. The group said prior discussions with the family failed and that the current claim far exceeds the original R5-million demand.

Executive turnover has added to Spar’s instability. Swartz’s predecessor, Brett Botten, left after under two years amid governance concerns, and several senior executives involved in the original SAP project have also departed.

Financially, Spar reported subdued growth. Wholesale turnover from continuing operations rose just 2.1% year on year for the 18 weeks to 30 January 2026, with Southern Africa growing only 0.9%. Gross profit margins in the region declined due to an unfavourable sales mix, targeted Black Friday promotions, and ongoing investments in loyalty and margin recovery in KZN. The group warned that operating margins for the first half of 2026 are likely to remain under pressure, with gradual recovery expected in the second half as cost realignment and wholesale volume rebuilding take effect.

Spar is pursuing structural initiatives to cut costs, including distribution network optimisation, centralised non-trade procurement, stricter credit management, and expanded private label offerings. The board also plans to appoint a dedicated managing director for the Southern Africa grocery and liquor segment to strengthen accountability.

Shares have been under pressure, falling nearly 35% in 2025, and dropped an additional 5% on Monday (23/02/2026) following the trading update.

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