Multinational South Africa-based retail chain SPAR Group’s operational performance during the first half (H1) of fiscal 2025 (FY25) has shown mixed results across different regions, with headline earnings per share (EPS) from continuing operations dipping slightly by 0.4% to 450.1 cents.
Revenue from ongoing operations held steady at R66.1bn ($3.72bn), with gross profit climbing to R7.1bn. Operating profit experienced a modest rise of 1.6%, reaching R1.5bn, bolstered by enhanced cost management efforts.
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The group’s earnings before interest, taxation, depreciation and amortisation (EBITDA) also saw an uptick of 1.7%, amounting to R1.7bn.
SPAR Group made headway on its strategic objectives amidst a tough market environment, focusing on five critical areas: exiting Poland, restructuring debt within the group, conducting a strategic review of European operations, expanding the implementation of SAP [systems, application and data processing], and targeting an improvement in southern Africa EBIT margin to 3%, alongside achieving a leverage ratio between 1.5 and 2.0 times by fiscal year-end 2026.
During the first half of 2025, the group achieved three of these goals: finalising the sale of SPAR Poland in January, completing debt restructuring in March, and announcing plans in May to divest its Swiss operations as well as AWG in the UK after thorough strategic evaluation and consideration of capital allocation priorities and long-term strategic direction.
The group is in advanced negotiations with potential buyers for these businesses. SPAR Switzerland and AWG have been classified as discontinued operations, with post-tax losses including impairments amounting to R4.4bn.
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By GlobalDataThe board believes that the divestments are consistent with SPAR’s strategy to concentrate on strengthening its core businesses in Southern Africa and Ireland.
Cash generation from total operations significantly increased 50.1% to R1.9bn.
In Southern Africa, the group’s wholesale turnover increased 1.7%, with its grocery and liquor segments contributing to this growth.
Retail revenue in the region also saw an increase of 1.9%. The SPAR2U app’s delivery volumes surged 174%, demonstrating the brand’s growing on-demand presence.
Build it, the group’s building materials retail brand, posted a sales increase of 4.1% with strong like-for-like retail growth.
In Ireland, despite a marginal local currency revenue decrease, the gross margin benefited from a favourable product mix. The minimum wage increase, however, led to higher labour costs.
No interim dividend has been declared for the period, with future considerations dependent on macroeconomic and operating conditions.
Looking forward, SPAR Group is concentrating on margin improvement and operational execution in its core markets.
In southern Africa, SPAR aims to enhance retail segments and operational efficiencies, with initiatives such as expanding on-demand services and increasing private label product penetration.
In Ireland, SPAR Group subsidiary BWG Group, a food retail and wholesale distribution company, is focusing on growing its convenience retail brands and exploring new opportunities.
