SPAR posts R4.8bn loss as costly international exits overshadow resilient core operations

Key topics:R5.6bn loss from discontinued international operations, including Poland and SwitzerlandCore SA and Ireland operations remain profitable with strong cash generationBanking facilities restructured; liquidity and covenant compliance strengthenedSign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..BizNews Reporter.The SPAR Group has reported a bruising 2025 financial year, posting a R4.83 billion loss after tax as the retailer’s long-anticipated exit from several international markets triggered massive impairments and write-downs. While the bottom line was dominated by discontinued operations in Poland, Switzerland and the still-to-be-sold UK business, SPAR’s core operations in Southern Africa and Ireland continued to show resilience, generating positive headline earnings and strong cash flow.The Group’s losses reflect the high accounting cost of its international retrenchment strategy. Discontinued operations recorded a R5.65 billion loss, driven largely by R4.60 billion in impairments linked to the disposal of the Polish and Swiss subsidiaries and the classification of the UK division as held for sale. SPAR confirmed it has fully impaired its Polish and Swiss investments prior to disposal, resulting in a R2.90 billion impairment at Company level and contributing to a Company loss before tax of R3.02 billion, deepening from a R353.7 million loss in 2024.The cleanup extended into the South African business, where SPAR revised its impairment methodology for corporate stores, shifting from distribution-centre groupings to testing stores individually as cash-generating units. This resulted in R675.6 million in impairment charges, including R350.3 million against goodwill and R232 million against right-of-use assets..These heavy impairments pushed basic earnings per share down to (2,507 cents) from 182.7 cents in 2024. Reflecting both the need to preserve cash and the volatile trading environment, the Board again opted not to declare a final dividend, mirroring last year’s decision.Despite the severe statutory loss, SPAR’s continuing operations delivered a more stable performance. Profit after tax from ongoing activities—primarily the Southern African and Irish operations—came in at R819.8 million, although down from R1.61 billion the prior year. Group revenue from merchandise sales in continuing operations edged higher to R131.46 billion, up slightly from 2024.Headline earnings from continuing operations remained in positive territory at R977.3 million, though lower than last year’s R1.42 billion. Headline earnings per share declined to 768.9 cents (2024: 896.0 cents), reflecting a tougher trading environment and higher operating expenses.One bright spot was cash generation. Cash from operations rose to R5.45 billion from R4.81 billion in 2024, while year-end net cash improved substantially to R2.74 billion, up from R618 million. SPAR attributed this to disciplined working-capital management and the benefits of disposing loss-making offshore assets.The Group also undertook significant financial restructuring during the year, particularly across South Africa and Ireland. SPAR renegotiated banking facilities and maintained full compliance with all debt covenants, even as the Group absorbed obligations linked to the discontinued Polish business. The Southern Africa division reported a leverage ratio of 1.82x—well within the permitted maximum of 3.0x—while interest cover stood at 4.50x, above the 3.5x requirement.Governance structures were bolstered too. SPAR appointed Moegamat Reeza Isaacs as Group CFO effective 1 January 2025, and advanced a finance-transformation initiative aimed at improving automation, reporting systems, internal controls and treasury management. The Audit Committee concluded that the Group’s internal financial controls remain effective.Despite the turbulence caused by exiting underperforming markets, the Board reiterated that the Group is a going concern, citing strong liquidity, covenant headroom and ongoing operational profitability in its core regions. Responsible capital allocation and resuming shareholder returns remain priorities, though dependent on market conditions.For SPAR, 2025 was a year of painful strategic pruning. While the write-downs are substantial, the Group argues that concentrating on Southern Africa and Ireland provides a more stable foundation for future growth. The focus now shifts to consolidating operations after a transformational—and costly—year..Read the results in full by downloading the PDF below

SPAR posts R4.8bn loss as costly international exits overshadow resilient core operations

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