The SPAR Group is close to selling its UK business amid a series of challenges facing the retailer.
The group said that it is making progress on the disposal of its UK business, Appleby Westward Group (AWG), which is presented as a discontinued operation.
The group said that discussions have advanced and the transaction structure has been substantially agreed upon, subject to final documentation and customary approvals.
The proposed structure is designed to facilitate an orderly transition of the business while also limiting ongoing financial exposure for the group.
Based on an impairment seen in the financial year ended 2025, and updated assessments of asset values, SPAR’s management does not expect a further material impairment in respect of AWG.
The group also does not anticipate needing to make a cash injection for the disposal, which the group needed to do with other international sales.
The sale of the UK business would follow the sales of SPAR Switzerland and SPAR Poland for the group.
SPAR sold its Swiss business to Tannenwald Holding, selling its entire shareholding in SPAR Switzerland for a total equity value of CHF 46.5 million (R1 billion).
That said, the sale resulted in a cash outflow of CHF 31 million (R680 million) for the group, which included CHF 11.5 million (R250 million) reserved for a settlement with the Swiss Competition Commission.
However, Tannenwald has assumed all of SPAR Switzerland’s outstanding debt to third-party financiers, reducing the group’s overall debt.
In a similar move, the group disposed of SPAR Poland for R185 million, but still needed to inject R2.7 billion to recapitalise the business for buyer Specjal.
The deal removed a loss-making business from SPAR’s balance sheet and allowed it to focus on its core operations in South Africa.
While the group is close to selling its third international business, SPAR remains committed to its Irish subsidiary.
SPAR struggles
Over the 18 weeks ended 30 January 2026, the group said that it operated in a highly competitive market with low food inflation and deflation in several key categories.
“In response, SPAR deliberately intensified promotional activity to support retailers, protect volumes, and reinforced its value proposition,” it said.
The group’s wholesale turnover from continuing operations for the period was 2.1% up year on year. That said, gross profit margins in Southern Africa declined.
The group said that this reflected an unfavourable sales mix, the impact of its targeted promotional
strategy over the Black Friday period, and investment in loyalty and margin recovery in KZN.
“A significantly rising cost base, including rising operating and wage cost inflation, continued investment in systems transformation, IT infrastructure and the SAP rollout in FY2026, continues to negatively impact margins.”
“Distribution network optimisation is a key focus area and forms part of a broader structural reset designed to support sustainable operating margin improvement.”
Other key operating margin initiatives include expanded private-label channels, improved credit discipline, better pricing and optimising the corporate store portfolio.
The group has also amended its SAP rollout strategy following a disastrous software rollout at its KZN distribution centre.
“While the initial approach integrated warehouse, finance and purchasing systems, the revised plan separates finance from distribution centre operations in order to reduce disruption and execution risk.”
“This finance transition to a single SAP environment with a unified chart of accounts will be executed in this financial year, establishing a single version of financial data and enabling efficiency and governance improvements.”
The botched SAP implementation at its KZN distribution centre has now become a legal issue for the group, with it receiving a summons related to alleged claims from the rollout.
While the group engaged with the claimant to resolve the matter, no agreement was reached. The current amount claimed also exceeds the initial claim of R5 million presented by the claimant.
“To date, all KZN retailers affected during the early SAP implementation period, except for the claimant and one additional retailer, have reached amicable settlements with the group, it said.
“Service levels at the distribution centre have since stabilised and are now consistent with industry standards.”
ZAR Turnover growth18 weeks ended 30 January 2026 (% change) *Grocery & Liquor0.8Build it(2.4)SPAR Health23.0Southern Africa0.9Ireland6.1Group2.1