Spar Group CEO Reeza Isaacs has acknowledged a series of management failures that contributed to the retailer’s disappointing performance, saying costs were allowed to outpace revenue growth and that profitability was not given sufficient priority.
The admission forms part of the group’s efforts to rebuild credibility and improve execution across the business. He was commenting on the group’s performance for the six months ending 27 March 2026.
Isaacs took over from former CEO Angelo Swartz on 1 March. The group said that, under Isaacs’ leadership, Spar will refocus the business on its core engine: the independent retailers.
Spar admits to failure
The group released its interim results for the six months on Wednesday, revealing a period of significant pressure, with operating profit affected by three main challenges: underperformance in KwaZulu-Natal (KZN), an ineffective Black Friday campaign that failed to deliver a return on investment, and residual balance sheet clean-ups.
The retailer acknowledged its challenges, but cited that this period of difficulty is a “clear baseline against which progress and recovery can be measured”.
“These are not market problems; they are execution problems, and they are fixable. We allowed our cost base to outgrow revenue for too long,” said Isaacs.
“We allowed our cost base to outgrow revenue for too long. We also failed to treat retailer profitability as our primary metric. Confronting these issues openly is a necessary step in building credibility and ensuring that future performance is grounded in accountability and measurable execution.”
Spar’s future
The retailer said it is shifting its focus from supplier to true partner for retailers, guided by the principle that “Spar succeeds when our retailers succeed”.
The group’s recovery strategy is built around improving retailer outcomes first, based on the belief that stronger retailers create stronger volumes, stronger loyalty and ultimately a stronger Spar system.
“While the interim numbers are under pressure, Spar’s leadership believes early indicators suggest that the corrective actions underway are beginning to gain traction,” said the retailer.
The CEO’s focus
In support of the retailer’s recovery strategy, Spar has intensified engagement with independent retailers and the National Guild to ensure retailer concerns are heard and resolved more quickly, and is moving from ambition to action through five pillars of execution:
- Stronger procurement, better pricing: Using group scale to buy better, resolve wholesale price disparities and centrally manage the top 250 key value items to protect retailer availability and competitiveness.
- Brand and marketing effectiveness: A full review of marketing spend is underway, supported by a return-on-investment framework, to rebuild brand conviction around the community-focused independent retailer.
- Repositioning SPAR2U: Differentiating SPAR2U around a more personalised retail experience, supported by investment in a new platform and the continued growth of digital partnerships.
- Future-fit retail technology: Modernising retail systems and processes to give retailers real-time, store-level reporting and to remove manual processes while reducing operational complexity.
- Empowering retailers to improve profitability: Benchmarking, staff-scheduling tools, rental-negotiation support and cost-effective revamps to ease the squeeze on retailer profitability – now the group’s primary operating metric.
Transparency at the forefront
Spar said it intends to report transparently on progress against these interventions as they mature.
“In KZN, a structured stabilisation programme has restored three consecutive months of operating profit to close the half, with out-of-stock rates materially improved and a new local perishables model supporting better availability and revenue growth,” said the retailer.
“New leadership is in place across merchandise, finance and retail operations.”
Outside of South Africa, the group has reached the final milestone in its portfolio simplification with the exit from Southern England (AWG), following the disposal of Polish and Swiss assets in previous periods. This allows leadership to focus entirely on the core South African and Irish (BWG) markets.
BWG Foods in Ireland delivered a solid performance with sales of €855.7m (+2.2%) and improved gross margins, demonstrating the resilience of the independent model.
“The business continues to provide a strong example of how independent retailers can outperform when supported by the right wholesale infrastructure, operating disciplines and customer proposition.”
Rebuilding trust
“The path forward is about proof, not promises,” said Isaacs.
“We are committed to rebuilding trust one store at a time by fixing the engine room that powers our retailers. Recovery will not be defined by a single reporting period.
“It will be defined by consistent operational improvement, stronger retailer outcomes and visible progress over time. We believe in the independent retail model because it offers local relevance that other retail chains cannot match.
“We are grounded, we are fixing the fundamentals, and we are invested in our retailers’ wins.”
Financial performance
The results showed that gross-profit growth turned positive in February and March. KZN service levels have improved; Spar Health grew by 26%; and retailer support initiatives provide initial evidence that the operational fundamentals are moving in the right direction.
Spar Rewards’ sales grew 9.3% year-on-year, with the Spar Rewards programme now having 12.8 million registered cards, and members spending 74% more per basket than non-members.
- Group turnover: R67.7 billion below inflation, reflecting volume pressure.
- Group gross profit: Margin at 10.6%, broadly in line with the prior period
- Operating profit: R730.7 million (R882.0 million before extraordinary items)
- Headline Earnings Per Share (HEPS): 199.9cps (-55.5%).
- Net debt: R7.3 billion, up from R5.4 billion at September 2025 on working-capital timing, and well below the R9.8 billion peak in 2022.
- Retailer loyalty: Stable at 78.5% on a 12-month rolling basis.
