Major retailer closing stores in South Africa

Retailer SPAR has taken a hit in the 18 weeks ended 31 January 2025, recording a 1.6% drop in turnover across its operations.

The group is also continuing to close underperforming corporate stores in its portfolio, with the plan to close 13 grocery stores in its South Rand Region.

The group described the trading environment as “challenging”, noting lower sales due to constrained consumer spending in all regions.

However, it struck a more optimistic tone, saying that is seeing positive momentum, improving operating margin levels and results from cost controls and promotional activity.

SPAR CEO Angelo Swartz said that the group’s Southern Africa margin recovery is being bolstered by the improved performance of the KZN distribution centre, the disposal of non-performing corporate stores, and enhanced operational efficiencies.

Build It recorded 7.3% top-line growth, with similar growth seen at the retail level.

Meanwhile, SPAR’s pharmaceutical division continued its strong trajectory, posting 13.3% turnover growth, driven by robust performance in both wholesale and Scriptwise sales.

However, there was a significant drag from its Irish and Swiss operations, which saw turnover decline of 6.7% and 9%, respectively (1.6% and 5.2% declines in local currency).

Looking at SPAR South Africa specifically, retail sales grew by 3.4% across the group’s 2,029 supermarket and liquor stores, with same-store sales growth of 3.0%, slightly ahead of national inflation.

“Growth was particularly robust in our lower-income grocery stores with subdued growth in our middle- and higher-end stores,” it said.

Operating losses from corporate grocery and liquor stores were reduced during the period due to improved performance and the closure of non-performing stores.

SPAR’s on-demand shopping platform, SPAR2U, delivered solid growth in order volumes of 285% compared to the prior comparative period.

The finalisation of the SPAR Poland disposal on January 31, 2025, marked a significant milestone in the group’s European strategic review, which it aims to complete by June 2025.

At last reporting, the group made it clear that its strategy is to pivot and focus on the businesses it understands best—meaning a strategic focus on South Africa.

Swartz said in January that the group’s foray into Poland brought hard lessons, key of which is that the company knows local best.

He said that the experience also impacted the group’s views on future expansion outside South Africa’s borders.

“For now, our focus is on the heart of our business, being South Africa,” he said. “Our energies are best spent at home focusing on the challenges of the local market and expanding our business.”

The group has also effectively resolved the SAP system issues in KZN, with the next phase of the full system rollout focusing on Build it, Imports Warehouse, and the Eastern Cape distribution centre in the first half of 2026.

The SAP matter was a huge dent on the group’s books, with the failed implementation of the enterprise resource planning system costing the group R1.6 billion in 2023.

“Looking ahead, we remain focused on innovation and efficiency, ensuring that our communities, our shoppers and our retailers remain at the heart of everything we do,” Swartz said.

The group’s interim financial results for the six months ending 31 March 2025 will be published in June 2025.