If you had bought Spar shares back in 2009, just as the world was starting to recover from the global financial crisis, you would now be flat — almost 17 years later!
Sure, there would’ve been dividends along the way, but even cash returns to shareholders have disappeared since 2022.
A substantial portion of that depressing long-term chart can be attributed to Spar’s value-destructive offshore strategy. But there’s also been severe recent pressure on the share price that has nothing to do with offshore.
During this ugly recent turnaround period, I took a small punt on Spar based on the progress it had already made in cleaning itself up. Though it felt somewhat speculative at the time, I had waited for key milestones to be achieved. But things just kept going wrong, and I certainly didn’t have a shock exit of the CEO anywhere on my bingo card. After a precipitous decline of 35% year to date, Spar shareholders are in a really tough spot.
The situation is made even worse by the high oil price. As a wholesaler, Spar is directly exposed to the impact of the fuel price on supply chain costs. It will need to push these costs through to guild members, but there’s already a fractured relationship between the group and the independent retailers. The freedom that guild members enjoy in their procurement decisions means that Spar will be under constant pressure to keep costs down.
Against this backdrop, do investors cut their losses, sell their stakes and give up on potential upside? Do they sit tight and see if things improve, at the risk of losing even more money in a slow and steady decline? Or do they climb in while the share price is under so much pressure?
You won’t find many people in the third camp at the moment. There just isn’t enough information coming through from the company to justify a bull case. The market has been in a holding pattern for two months, mainly because Spar itself is finding its feet after the sudden exit of Angelo Swartz as CEO.
In the absence of strong strategic direction from the company, investors tend to focus on the negative headlines that regularly come through. When guild members are calling for chair Mike Bosman to resign, it doesn’t exactly inspire confidence in the market.
An otherwise successful Southern Africa operation was allowed to drift as management chased shiny things in Europe
Reeza Isaacs, who took over from Swartz, has his work cut out for him. His unexpected move from CFO to CEO raised eyebrows among investors who were hoping for a wartime CEO to be appointed — a turnaround specialist with a proven reputation in the FMCG or retail market, just like we saw at Tiger Brands and Nampak. The presence of Megan Pydigadu (now CFO), with her experience in the EOH-to-iOCO transition, should help, but Isaacs will need to convince stakeholders that he can make the hard decisions and get the group back on track.
To support the turnaround and to give guild members direct access to an executive who speaks their language as retailers, Spar has gone back to having an MD role for Southern Africa. This allows the group executive to focus on the broader story and the various responsibilities that come with being a listed company.
But the broader story is exactly what broke Spar in the first place. An otherwise successful Southern Africa operation was allowed to drift as management chased shiny things in Europe. The market will want assurances that the new team is fully focused on the core grocery and liquor business.
With Isaacs having been in the role since March 1 2026, we are approaching the classic “first 100 days” — and that creates the expectation of a capital markets day at which leadership outlines why Spar has the right to win in an extraordinarily competitive grocery market. It is up against world-class operators in Shoprite and Woolworths, with the added risk of Pick n Pay regaining some lost ground.
Currently, it looks like management will wait until the interim results in early June to speak to the market about the broader strategy. A trading update for the 18 weeks to January 30 2026 was weak, so we might see a kitchen sink approach of shocking numbers as a base for the turnaround.
With Pick n Pay getting all the attention as the value-unlock trade in the sector, Spar is likely to experience market apathy in the lead-up to the interims. And unless management comes out with a bold and compelling strategy at that time, the share price could easily keep dropping. I’m finding it harder and harder not to cut my losses and walk away.
The writer owns shares in Spar
