Wrap Text
THE SPAR GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1967/001572/06)
JSE and A2X share code: SPP
ISIN: ZAE000058517
("SPAR" or the "Company" or the "Group")
TRADING UPDATE AND TRADING STATEMENT FOR THE 26 WEEKS ENDED 27 MARCH 2026
TRADING UPDATE
The following trading update is provided to give SPAR shareholders ("Shareholders") context in respect of
top-line performance for the 26 weeks ended 27 March 2026 ("Current Period" or "H1 FY2026").
Revenue growth 18 weeks to 30 January 2026 26 weeks to 27 March 2026
(% change)^ (% change)
Grocery & Liquor 0.8 1.1
Build it (2.4) 1.3
SPAR Health 23.0 26.1
Southern Africa 0.9 1.7
Ireland (EUR) 3.1* 3.4
Group 2.1 2.1
^ As published on SENS on 23 February 2026.
* ZAR revenue growth of 6.1% as published on SENS on 23 February 2026.
Group wholesale turnover from continuing operations grew marginally year-on-year during the Current Period.
In Southern Africa, SA Groceries & Liquor revenue growth remained below internal selling price inflation, which
was itself below official food Consumer Price Inflation (CPI), reflecting real volume and competitive pressure.
However, momentum improved through the second half of the Current Period. SPAR Health delivered strong
growth across wholesale and Scriptwise pharmacy channels. Build it posted positive like-for-like growth,
supported by infrastructure spend and a recently launched rewards programme. SPAR2U continued to scale
with e-commerce order volumes up strongly year-on-year. Retailer loyalty across the broader South African
distribution network held up. KwaZulu-Natal ("KZN") loyalty improved slightly on a year-on-year basis but
remains below historical and targeted levels.
Ireland (the BWG Group) delivered a solid performance, with top-line growth in local currency exceeding that
of the 26 weeks ended 28 March 2025 ("Prior Period" or "H1 FY2025").
TRADING STATEMENT
In terms of paragraph 6.26 of the JSE Listings Requirements, issuers are required to publish a trading
statement as soon as they are reasonably certain that the financial results for the period to be reported on next
will differ by at least 20% from the published financial results for the previous corresponding period.
Shareholders are advised that earnings per share ("EPS") from continuing operations on a comparable basis
is expected to be lower when compared to the Prior Period. Headline earnings per share ("HEPS") from
continuing operations on a comparable basis is similarly anticipated to be lower when compared to the
Prior Period.
The Group expects to report EPS and HEPS for the Current Period (excluding the results of discontinued
operations) within the ranges provided below:
Continuing Operations
26 weeks ended 26 weeks ended 26 weeks ended
27 March 2026 28 March 2025 27 March 2026
Expected range Expected range
(cents per share) (cents per share) (%)#
HEPS 174 to 217 434 -60% to -50%
Diluted HEPS 173 to 216 433 -60% to -50%
EPS 140 to 180 399 -65% to -55%
Diluted EPS 139 to 179 398 -65% to -55%
# Expected percentage range compared to H1 FY2025.
The following factors impacted earnings in the Current Period:
Margin and profitability
Total continuing Group margins reflected margin compression in Southern Africa, partially offset by a positive
contribution from Ireland.
In Southern Africa, gross profit margin declined by between 20 and 40 basis points. This was largely
attributable to elevated Black Friday promotional subsidy spend and underperformance at the KZN distribution
centre. Above-inflation cost growth and elevated debtor impairments in SA Groceries & Liquor contributed to
the substantial decline in operating profit relative to the Prior Period.
In Ireland, gross profit margin improved against the Prior Period, supported by better supplier trading terms
and a favourable sales mix. Operating margin was slightly ahead of the comparable period, underscoring the
sustainability of Ireland's performance.
The earnings decline reflects a combination of underlying trading conditions, Current Period operational
anomalies (primarily KZN performance and elevated Black Friday spend which are unpacked further below),
further impairments of historical asset carrying values and a more conservative approach to debtors
provisioning. A full reconciliation and operating profit bridge will be provided at the H1 FY2026 results
presentation on 10 June 2026.
KZN
KZN's H1 FY2026 performance was weighed down by, inter alia, short-term strategies that prioritised top-line
growth over profitability. A root cause analysis also attributed the sharp decline experienced in the first quarter
of the current financial year primarily to insufficient logistics capacity planning, which in turn disrupted service
levels and resulted in increased costs. KZN performance remains a key ongoing risk for the Group and
continues to be closely monitored at executive and Board level.
In response, corrective measures have been implemented, including key leadership changes. Gross profit
margin improved toward the end of the Current Period, although it remains below targeted levels.
KZN delivered three consecutive profitable months in February, March and April of 2026. While this is
encouraging, further work is required to fully stabilise operations and KZN remains a key area of focus.
Black Friday
While Black Friday 2025 delivered strong sales growth over the campaign period, it came at a meaningful cost
to gross profit margin and drove elevated marketing and promotional costs in November 2025. With the
appointment of the new Group Chief Marketing Officer, corrective steps are underway to introduce a more
disciplined and tightly controlled promotional investment model.
Impairments
The balance sheet has stabilised significantly, and the Group maintained its focused and disciplined approach
to assessing asset carrying values during the Current Period. Total extraordinary items recognised in the
Current Period included goodwill impairments, corporate store and held-for-sale asset impairments, all within
continuing operations and totalling approximately R128 million compared to R71 million in the Prior Period.
The majority of these impairments relate to legacy asset positions originating in prior periods, with a smaller
portion arising from current-year reassessments.
These impairments reflect management's continued focus on balance sheet integrity and ensuring that asset
carrying values accurately represent the underlying economic reality of the business.
Debtor impairments
Debtor impairments increased during the Current Period. Debtors' days in the SA Groceries & Liquor business
remained stable at 32 days, while overdue balances increased from the Prior Period.
The H1 FY2026 review process adopted a more conservative provisioning methodology, resulting in increased
expected credit losses, which the SPAR board of directors (the "Board") considers reflective of the current
credit risk environment. Debtor risk remains a key area of focus, with continued disciplined and active
management. Year-end provisions for the 52 weeks ending 25 September 2026 ("FY2026") will also be closely
scrutinised. A more detailed breakdown of legacy and cyclical impairments will be provided at the results
presentation on 10 June 2026.
Debt
Net debt increased during the Current Period, as was expected due to higher working capital investment and
the timing of Easter. All banking covenants were met. The festive season working capital build is expected to
unwind between March and September, with debt levels expected to reduce through the second half of the
financial year ("H2 FY2026").
Earnings guidance ' total operations
Shareholders are advised that in respect of total earnings, including discontinued operations, EPS and HEPS
for the Current Period are expected to fall within the ranges provided in the table below:
Total - continuing and discontinued operations
26 weeks ended 26 weeks ended 26 weeks ended
27 March 2026 28 March 2025 27 March 2026
Expected range Expected range
(cents per share) (cents per share) (%)#
HEPS 104 to 133 296 -65% to -55%
Diluted HEPS 104 to 133 296 -65% to -55%
EPS 70 to 80 (2,211) >100%*
Diluted EPS 70 to 80 (2,208) >100%*
# Expected percentage range compared to H1 FY2025.
* Percentage change exceeds a meaningful threshold given the low base in the H1 FY2025 comparative period.
UK Asset disposal
As announced on SENS on 18 May 2026, the Group entered into an asset purchase agreement with
A.F. Blakemore & Son, a SPAR UK wholesaler, in respect of the disposal of the UK (AWG) business, including
the right to operate SPAR in South-West England, 71 Company-owned stores, warehouse and logistics
infrastructure and associated independent retailer supply agreements. The disposal is anticipated to be
completed in stages from June through September 2026, with AWG continuing to be classified as a
discontinued operation under IFRS 5.
Looking ahead
In response to margin, cost and competitive pressures, the Group has identified and is executing on a set of
structural initiatives intended to realign its cost base and improve operating leverage over time, particularly in
Southern Africa, which is the Group's primary area of focus. Further, a refreshed leadership team is in place
to accelerate execution and sustainable long-term performance. The benefits of the following initiatives are
expected to build progressively through the second half of FY2026:
' KZN margin recovery: Gross profit margins are expected to continue recovering toward peer distribution
centre levels as corrective actions take effect.
' Dedicated SA Groceries & Liquor leadership: A dedicated Managing Director of the SA Groceries &
Liquor segment has been appointed to drive focused execution, retailer engagement and accountability
at a segment level.
' Strengthening retailer partnerships: Deepening the working relationship with our independent retailers
remains central to our focus, with renewed engagement on trading terms and joint value creation. We
are actively addressing five key retailer issues, including profitability and revenue growth; and maximising
omnichannel opportunities.
' Cost realignment programme: Several initiatives are underway across non-trade procurement
centralisation, organisation design, pricing and concession discipline, and logistics productivity. Financial
benefits are expected to accrue progressively through H2 FY2026 and into the 2027 financial year.
' SPAR Health and Build it momentum: Both segments are trading positively, and management expects
this momentum to continue through H2 FY2026.
That said, the Group remains cautious of several headwinds that may affect H2 FY2026 performance, including
rising fuel costs driving increased logistics and distribution costs, continued debtor risk requiring disciplined,
active management and the potential for further provisioning, intensifying competition from peers and
continued macroeconomic uncertainty.
SPAR enters H2 FY2026 with a cleaner balance sheet and a more focused geographic footprint. The executive
team has been refreshed with new appointments having been made, but recovery will take time and the
macroeconomic backdrop remains demanding. The near-term priorities include addressing key retailer issues,
improving the quality and consistency of earnings and continuing to build the foundation for sustainable
recovery.
Results presentation
The H1 FY2026 results are expected to be published on SENS on or about 10 June 2026. The results webcast
presentation, hosted by SPAR management, will follow on the same day and will be accessible via
https://www.corpcam.com/Spar10062026.
Shareholders are advised that this announcement does not constitute an earnings forecast, that the financial
information provided herein is the responsibility of the Board, and that such information has neither been
audited, reviewed or reported on by the Group's auditors.
By order of the Board
Umhlanga
29 May 2026
Sponsor
One Capital
Corporate Broker
Rand Merchant Bank, a division of FirstRand Bank Limited
Date: 29-05-2026 07:05:00
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