Amid turmoil Spar Group announces divestment of UK operation and leadership changes

The Spar Group is navigating a turbulent period as it reveals plans to sell the Appleby Westward Group (AWG), its UK-based operation. 

This announcement comes on the heels of a significant leadership change, with CEO Angela Swartz resigning after a demanding tenure that commenced in early 2023. The share price reflected market trepidation, plunging by 6.7% on Monday to R78.21, markedly lower than the R142.48 recorded a year earlier.

Following the company’s continuing pursuit to streamline operations, the AWG has been classified as a discontinued operation in its latest trading statement. The divestiture aims to bolster Spar’s financial health and refocus its efforts on its core Southern Africa market, where the company holds considerable competitive advantages. Last year saw the disposal of Spar Poland and Spar Switzerland, moves intended to stem losses, reduce debt and enhance operational agility.

Swartz's departure, effective February 28, leaves CFO Reeza Isaacs stepping into the CEO role from March 1, 2026, while Megan Pydigadu takes on the position of group CFO. An additional managing director for the Grocery and Liquor segment will be appointed to invigorate the retail landscape in Southern Africa.

Swartz said in an online presentation that his decision was driven by a desire to spend more time with family after a challenging period leading the group.

In the trading statement, Spar Group clarified that it does not foresee further impairments relating to the AWG sale and expects that the disposal will not require an additional cash injection, a departure from previous sales that strained finances. The Swiss business, sold to Tannenwald Holdings for about R1 billion, incurred a cash outflow due to associated costs, including a settlement with the Swiss Competition Commission.

Adding to the group's stress is a legal issue stemming from a flawed SAP implementation at the KwaZulu-Natal distribution centre, leading to a claim by franchisees. Despite efforts to resolve the dispute, an agreement remains out of reach, with the total claim amount now surpassing the original R5 million.

Notably, the group said most retailers affected have settled amicably. Also, service levels had stabilised at the distribution centre.

The trading environment during the 18 weeks leading up to January 30 was challenging for Spar, with low food inflation and deflation impacting several product categories.

In an effort to maintain volumes and customer loyalty, the company has poured resources into promotional activities. Group wholesale turnover from continuing operations noted a 2.1% increase; however, gross margins in South Africa faced pressure from a difficult sales mix alongside rising operational, wage, and IT costs.

Interestingly, the Grocery & Liquor segment experienced a bump in sales during a transitional October-to-January period, growing by 2.3% year-on-year, supported by an earlier strong performance in September linked to a new retailer rebate scheme.

In Ireland, its BWG Group division reported a promising 3.1% sales growth in local currency amidst stiff competition and ongoing cost-of-living challenges, buoyed particularly by gains in non-tobacco categories and food services.

To combat profitability pressures and enhance operational margins, Spar Group plans on further distribution network optimisation along with several other initiatives aimed at strengthening financial performance. The centralisation of procurement, improved credit discipline, enhanced governance, and bolstered logistics productivity are among the avenues being explored to reinstate operational effectiveness and foster sustainable margin recovery.

BUSINESS REPORT