SPAR is forecasting a weaker financial performance for its 2026 financial year, as operational challenges, leadership changes and ongoing tensions with its independent retailer guild continue to affect the group.

In a voluntary trading update published on SENS, the retailer said it expected its performance to fall below the levels achieved in the 2025 financial year.

The pressure has been most pronounced in Southern Africa, particularly within the group’s grocery and liquor operations.

SPAR acknowledged that operational improvements had yet to deliver sufficient earnings and cash flow benefits to counter the difficult trading conditions.

The group also reported a slowdown in sales revenue since its previous interim trading update, with revenue growth in Southern Africa remaining limited.

Wholesale volumes and trading activity continued to experience subdued conditions, reflecting intense competition and pressure on consumers.

“Consumer sentiment and consequently wholesale revenue continued to be under pressure with higher fuel, utility costs and elevated interest rates,” the group said.

SPAR added that it would provide earnings per share guidance once it had sufficient certainty, in accordance with JSE listing requirements.

The outlook follows a turbulent period for the retailer, marked by disagreements with its guild over leadership and concerns about the company’s operations.

Unlike conventional supermarket chains, SPAR relies on independent retailers to operate its stores, with these businesses represented through the group’s guild.

In its latest update, the company said efforts to improve cooperation with independent retailers were continuing.

SPAR reported that engagement with guild members was becoming more constructive, with greater emphasis on common commercial and operational objectives.

“Collaboration between SPAR and its independent retailers continues to improve, with a greater focus on shared operational and commercial priorities,” the company said.

Earlier in 2026, the guild called for the removal of former chairman Mike Bosman, citing concerns about confidence in his leadership.

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Following pressure from retailers, Bosman and deputy chairperson Shirley Zinn resigned on 17 August 2026.

The guild also questioned the company’s procurement practices amid distribution difficulties.

SPAR’s operational problems were compounded by its previous implementation of SAP software at its KwaZulu-Natal distribution centre. The project resulted in substantial losses and a R168 million lawsuit.

SPAR moves to appoint new directors

SPAR has outlined the process to fill the chairman and non-executive director positions left vacant by the departures of Bosman and Zinn.

The company said its Nomination Committee had engaged an independent recruitment firm to assist in identifying suitable candidates.

“The Board aims to finalise and announce the appointment of the Chairperson and additional non-executive directors by early November 2026.”

The appointments form part of a broader recovery plan that SPAR expects to implement progressively throughout its 2027 financial year.

The strategy includes reviewing underperforming corporate stores, with options ranging from operational improvements to possible closures.

The retailer is also strengthening its promotional controls and keeping a close watch on key value products to protect profitability.

In KwaZulu-Natal, SPAR has vacated its temporary overflow facility to reduce rental expenses and completed repairs to the flooring at its distribution centre.

The province remains a central focus of the group’s recovery efforts, with management closely tracking operational and financial progress.

“KZN’s recovery remains a priority, with month-on-month improvement in gross margin being observed,” the company said.

SPAR said it would continue engaging with the guild through established governance channels to address commitments arising from discussions.

It added that rebuilding trust would depend on consistent execution and better outcomes for independent retailers, while outstanding concerns would be tackled directly.

The recovery programme comes after a challenging year for SPAR, with its market value declining sharply since January.

The retailer has shed approximately R10 billion in market capitalisation year-to-date, while its share price has fallen by more than 50%.

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