Retailer Spar says it has successfully resolved the SAP system issues that plagued its KwaZulu-Natal distribution centre — the crown jewel in its supply chain — marking a critical milestone in its operational recovery.
The failure of the SAP implementation, which began in February 2023, led to supply chain inefficiencies, pricing visibility challenges and an estimated R2bn in lost sales during the 2023 financial year.
In a Sens announcement on Thursday, Spar confirmed that the resolution of these system failures has led to “notable operational improvements, particularly in pricing visibility.”
The group said it is now preparing for the next phase of the SAP rollout, which will focus on its Build it Imports Warehouse and the Eastern Cape distribution centre in the first half of 2026.
The resolution of the SAP issues comes at a crucial time as Spar works to strengthen its balance sheet. Spar said margin recovery is being supported by improvements at the KwaZulu-Natal distribution centre, the sale of underperforming corporate stores and enhanced operational efficiencies.
“We have engaged productively with our supportive lenders and have multiple levers to reduce debt, including effective working capital management, prudent capital expenditure and the disposal of noncore properties,” the group said.
In January, Spar finalised the sale of its loss-making Polish operations to local retailer Specjal for R185m, allowing it to tend to debt amounting to about R2.7bn. The company is also selling noncore property assets, including its Pinetown head office, the Knowles Shopping Centre, and a West Rand property, to further cut its R9bn debt pile.
Despite a challenging consumer environment, Spar has seen some bright spots. While total sales from continuing operations declined by 1.6% for the 18 weeks to end-January, retail sales in Southern Africa grew by 3.4%. Its on-demand shopping platform, SPAR2U, reported a 285% jump in order volumes year-on-year, the group said.
Build It recorded 7.3% growth and Spar’s pharmaceutical division posted a 13.3% turnover increase, driven by strong wholesale and Scriptwise sales.
“Achieving improved profitability in such volatile market conditions is a testament to our clear and decisive strategy. It’s particularly pleasing to see strong momentum in our lower- and middle-income stores, and we remain committed to rewarding our customers’ trust across all markets,” CEO Angelo Swartz said.
Internationally, however, Spar’s European operations continue to face challenges, with retail sales in Ireland and Switzerland declining by 1.6% and 5.2%, respectively, due to cost-of-living pressures.
However, the disposal of Spar Poland marks a key milestone in its broader European strategic review, which is expected to be completed by June 2025.
With SAP issues now behind it, Spar is positioning itself for improved financial stability and long-term growth in both local and international markets.
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