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VOLUNTARY UPDATE ON BOARD APPOINTMENT PROCESS, OPERATIONAL TURNAROUND AND PERFORMANCE TO DATE
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”)
VOLUNTARY UPDATE ON BOARD APPOINTMENT PROCESS, OPERATIONAL TURNAROUND AND PERFORMANCE TO DATE
In light of recent media coverage and shareholder enquiries, this announcement updates shareholders on the
process to appoint a new Chairperson and additional independent non-executive directors (NEDs), the Group’s
operational turnaround and financial performance to date.
BOARD COMPOSITION AND THE APPOINTMENT PROCESS FOR THE CHAIRPERSON AND NON-EXECUTIVE
DIRECTORS
The Nomination Committee has appointed an independent search firm to support the recruitment process for
these positions. Candidates are being assessed against the Committee’s defined criteria and skills matrix, with
particular attention to the retail, remuneration, financial and governance experience the Board requires to
implement the Group’s turnaround, as well as the importance of maintaining appropriate diversity of skills,
experience and demographic representation.
As part of this process, the Board has identified individuals of high calibre whose skills and experience, it believes,
could make an invaluable contribution to the business and its turnaround. The Board has also received
representations from shareholders and retailer representative structures regarding potential candidates who are
being assessed through the same process.
The Board aims to finalise and announce the appointment of the Chairperson and additional NEDs by early
November 2026. Any resulting appointments will be made in accordance with regulatory requirements, followed
by shareholder election at the next annual general meeting.
The Board remains committed to conducting this process in an independent, rigorous and transparent manner,
and will update shareholders further as and when there are material developments.
OPERATIONAL PROGRESS AND THE TURNAROUND PATHWAY
Collaboration between SPAR and its independent retailers continues to improve, with a greater focus on shared
operational and commercial priorities. The SPAR wholesaler executives and Guild representatives recently spent
two days together in KZN (over 16 and 17 September 2026) in working sessions on priorities for retailers and the
wholesaler.
The Group has made progress on the operational priorities reported at H1 FY2026 and is focused on initiatives
which underpin and align the retailer focus areas set out at the interim results and form part of one integrated
recovery plan rather than separate workstreams. These include merchandising and pricing, marketing
effectiveness SPAR2U, retailer technology and profitability. Retailers and the Group exchanged views
transparently, worked through practical obstacles and agreed on shared accountability.
Whilst these workstreams are being progressed, the earnings and cash benefits are expected to build progressively
through FY2027.
Margin optimisation
• Pricing, range and category optimisation initiatives are under way, with stronger monitoring of key-value
items and retailer profitability.
• Promotional disciplines have been tightened, with clear return thresholds and close retailer alignment.
• Improved distribution efficiency, focused on cost-per-case benchmarking, productivity, inbound and
outbound service metrics and fleet utilisation.
• Non-performing corporate stores being turned around, closed or disposed of, with a number expected to
be exited during calendar 2026.
Improving efficiency
• Cost optimisation initiatives focused primarily on IT, discretionary spend, marketing and logistics, with an
emphasis on sustainable net savings and stronger cost discipline.
• Remediation of the KZN distribution centre flooring is complete, and the temporary overflow facility has
been exited, eliminating the related incremental lease cost. Both measures form part of broader efficiency
initiatives within the region. KZN’s recovery remains a priority, with month-on-month improvement in
gross margin being observed.
• SAP finance deployment now live and stable in central office and four distribution centres, three of which
went live in early August.
Growth initiatives
• SPAR2U, private label and customer-relevance refresh initiatives progressing through defined pilots.
• Refreshed SPAR2U proposition shaped with a retailer advisory group, with a pilot rollout planned for
December 2026.
• Private label repositioning focused on route-to-market redesign, SKU rationalisation and promotional
effectiveness to improve margin across the value chain.
The Group will continue to work through the Guild and formal governance structures on the commitments arising
from this work. The relationship will be strengthened by consistent delivery and improved retailer outcomes, while
difficult issues continue to be addressed directly.
Overall progress will be assessed against wholesale growth, operating margin, retailer profitability, service levels,
overdue debt, cash generation and leverage. Management expects the financial benefits to build during FY2027,
with full execution and embedment likely to extend beyond that.
FINANCIAL PERFORMANCE
FY2026 is expected to underperform FY2025, with the pressure concentrated in Southern Africa, specifically in
Groceries & Liquor. Operational improvements have not yet translated into sufficient earnings or cash benefits to
offset that pressure. Management’s immediate priority is to improve profitability and cash generation in Southern
Africa while maintaining appropriate levels of support for retailers.
For the 48 weeks ended 28 August 2026, Group revenue from the sale of merchandise moderated from the interim
period with Southern Africa recording modest revenue growth as wholesale volumes and trading remained
subdued in a competitive consumer environment. Consumer sentiment and consequently wholesale revenue
continued to be under pressure with higher fuel, utility costs and elevated interest rates.
BWG continued to deliver consistent growth in local currency.
Retailer expected credit losses (ECL), specific provisions and write-offs remained elevated in Southern Africa. At
H1 FY2026, SPAR disclosed additional provisions in Southern Africa, mainly in the Groceries and Liquor business
and this credit pressure continued after the interim period.
The financial information included in this announcement has not been reviewed or reported on by the Group’s
external auditors. SPAR will provide guidance on the expected EPS and HEPS ranges in compliance with the JSE
Listings Requirements once the Board has reasonable certainty, to the extent required.
FUNDING, LENDING PARTNERS AND COVENANTS
Debt reduction, liquidity and covenant management remain key priorities for the Group. Group net debt levels
are expected to reduce versus the first half of the year. Debt levels continue to improve with lenders remaining
supportive of the Group. Whilst overall debt levels have reduced, elevated ECL provisions and other impacts have
increased pressure on earnings in Southern Africa. The Group expects to meet the revised covenant limits as
agreed with its lenders. Final net debt, leverage and interest-cover metrics will be reported with the FY2026 annual
results.
CLOSING
Management has strengthened the operating plan and execution disciplines but expects the earnings and cash
recovery to lag implementation.
The collaboration between the Group and its independent retailers on shared operational and commercial
priorities continues to improve, and there is a renewed commitment to strengthening the SPAR system in
Southern Africa.
The Group remains focused on disciplined execution of its turnaround priorities and on strengthening the business
in a way that supports sustainable long-term value creation for shareholders, retailers, employees and other
stakeholders.
Annual results for FY2026 are expected to be released on or about 4 December 2026.
Umhlanga
28 September 2026
Sponsor
The Standard Bank of South Africa Limited
Date: 28/09/2026 07:30:00
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