September 28, 10:18TechCentral

Spar plans update to online shopping service Spar2U following financial difficulties

The Spar Group announced on Monday during a trade update that it will begin testing an updated version of its online shopping service, Spar2U, in December. The company also warned that profits for the 2026 fiscal year will not reach the level of the previous year.

The new Spar2U offering was developed in collaboration with a retail consultants group. Spar first launched Spar2U in 2022, entering a market already occupied by Shoprite's Checkers Sixty60 service during Covid-related lockdowns.

Spar2U is one of several growth initiatives underway as part of so-called 'defined pilot projects.' These initiatives are being conducted parallel to the repositioning of Spar's own brands and a broader update of relevance for customers. The company emphasized that all these endeavors, alongside work on merchandising, pricing, marketing, and technology for retailers, 'are part of a unified recovery plan, not separate areas of work.'

Most Spar stores belong to independent retailers who purchase goods from the group's distribution centers. This model complicated the implementation of a unified online service, as explained by Spar's Executive Director for Omnichannel Solutions, Blake Roubenheimer, at the TechCentral show last year.

The Monday update reported that Spar's wholesale sales managers and representatives of the Guild representing Spar retailers held two-day working sessions in KwaZulu-Natal on September 16 and 17. Spar noted that the retailers and the group 'transparently exchanged views, overcame practical obstacles, and agreed on shared responsibility.'

This update follows a period of confident statements. In May 2025, Spar claimed that Spar2U had grown from 87 points in 2022 to over 500, with orders increasing by 285% year-on-year, and that the service led the market in volume. However, no new figures were provided on Monday.

Under Pressure

Competition has also not slowed down. According to TechCentral, by the end of 2025, Sixty60 generated revenue of 11.9 billion rand over the half-year, utilizing about 875 stores.

Spar's technology budget is also under pressure. The group stated that cost optimization efforts are focused 'primarily on IT, discretionary spending, marketing, and logistics.'

Information was also presented regarding progress with SAP systems. SAP financial software is now 'working and stable' at Spar's head office and four distribution centers, three of which started operations in early August. Spar reported that floor tiling repairs at the KwaZulu-Natal distribution center have been completed, the temporary overflow warehouse has been cleared, and gross margin in the region is improving monthly.

The financial picture remains weak. Spar forecasts that the 2026 fiscal year will be worse than 2025, with pressure concentrated in its food and alcohol sales business in South Africa. Revenue growth in South Africa was 'modest' in the 48 weeks leading up to August 28, as consumers faced rising fuel and utility prices, as well as high interest rates, and credit losses among retailers remained elevated.

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iol.co.zaSeptember 18, 13:03

Investor sells SPAR shares while others buy, despite company difficulties

A small major investor has almost completely exited its stake in SPAR Group, while other market participants have been increasing their positions, as reflected in a series of disclosures regarding significant holdings in this troubled retail chain moving in opposite directions.

Despite a large asset manager selling its shares down to nearly zero, SPAR shares rose by 4.29% by mid-morning on Thursday, although they have fallen by 77.43% over five years.

Coronation Asset Management, which manages investments for both institutional and private clients, significantly reduced its beneficial stake in SPAR. The company decreased this stake from 10.89% in August to just 0.17%.

The investment manager had previously reduced its stake from 10.89% to 9.53% on August 27, after which further selling brought it down to 5.06%. The latest transaction, announced on Thursday, reduced the stake to 0.17%, effectively leaving the company with minimal involvement in the retail business.

Inflow of New Investors

However, while Coronation Asset Management was winding down its participation, other investors were actively entering the market. In August, Mianzo Asset Management, a South African investment manager, increased its interest to 10.30%. Later, in mid-September, Peresec Prime Brokers raised its beneficial stake from 0.27% to 6.254%. Peresec provides primary brokerage and other financial services to institutional investors and asset managers.

Furthermore, corporate executives' funds were also flowing into SPAR internally. Former Chief Operating Officer Megan Pydigadu acquired about 1 million Rand worth of SPAR shares last September.

This activity takes place against the backdrop of a difficult year for SPAR, which characterized the first six months leading up to March as a 'tough start to the year.'

Difficult Period

The group's total turnover increased by 2.1%, reaching 67.5 billion Rands, but earnings per share fell by 53.9% to 199.9 cents, and net profit decreased by 64.1% to 291.7 million Rands. SPAR's operations in KwaZulu-Natal became one of the biggest challenges during the reporting period, as operational difficulties cost the group 123 million Rands in operating profit.

Despite a 4.9% rise in regional sales, SPAR reported that this growth did not translate into increased profit, and operations were close to breaking even for the half-year. At one point, stock shortages exceeded 15%.

SPAR's Black Friday campaign also impacted the retailer. The total loss from this period amounted to 212 million Rands, including 152 million Rands in overspending and 60 million Rands in margin impact.

Despite all the difficulties, SPAR told investors in its interim results that its shares are 'significantly undervalued.' The company noted that a share buyback would be logical under suitable circumstances, but dividends remain suspended as the group preserves capital, works on revenue recovery, and manages an elevated level of debt.

Even though a large asset manager was selling its shares down to nearly zero, SPAR shares rose by 4.29% by mid-morning on Thursday, although they have fallen by 77.43% over five years.

Resolving Issues

Throughout the year, SPAR also spent considerable time resolving legal disputes and corporate governance issues. In June, the retailer issued a detailed market statement defending its management amid reports of due diligence checks by BDO, commissioned in connection with the alleged acquisition of the Bloed Street SuperSPAR and TOPS stores valued at 4 million Rands.

SPAR stated that the review concerned only one store and was neither an audit nor a forensic examination of the entire group. The company rejected allegations of VAT fraud, stating that its external auditor, PwC, found no undisclosed violations related to financial reporting or governance processes.

Business Situation

The company also faced over 20 lawsuits by that time, although it maintained that the disputes were part of conducting large-scale retail business. In the same June statement, SPAR strongly supported then-Chairman Mike Bosman after he filed a motion seeking to declare him a dishonest director. The group characterized this filing as 'unfounded, malicious, hostile, and baseless.'

Two months later, Bosman and Deputy Chairman Shirley Zinn resigned amidst accusations of threats. Against this backdrop, SPAR is restructuring its operations and reducing its presence in Europe, including selling its British business, as it focuses on South Africa and Ireland.