Spar CEO: ‘We got distracted – now it’s back to basics’

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JIMMY MOYAHA: The Spar Group released its interim results for the first six months of its new financial year.

We’re going to be looking at these results in a bit more detail with the chief executive officer at the Spar group, Reeza Isaacs. He joins me on the line now to see if we can make sense of that performance.

Read: Spar CEO confronts ‘execution problems’ as profits tumble

Mr Isaacs, lovely having you on the show. Thanks so much for taking the time. Congratulations are in order. You and I have not had the privilege of speaking since you’ve assumed the role. I imagine it was a bit of an unexpected turn of events with the change of leadership – but congratulations, nonetheless.

On the numbers side, how have you and the team found the first six months of the year?

REEZA ISAACS: Jimmy, firstly, thank you for having me on the show and thank you for the congratulations. It certainly wasn’t on the bingo card for 2026. But here we are. These have been quite some 90 days.

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But just back to your question, the first half has been tough, there’s no there’s no doubt about it. Headline earnings down 50%, 55%, 54%, and SA margin at circa 1%.

There are a few bright spots in there, in our Irish performance [and] working capital management. And we managed the sale of AWG, which was our UK business and this [was the] last part of the European cleanup.

So the portfolio is focused on SA and Ireland, but we’ve got, let’s just say, foundational work to do in in the groceries and liquor business in South Africa.

JIMMY MOYAHA: Reeza, can we take a look at that cleanup? Obviously this predates your term as chief executive. I remember catching up with your predecessor, Angelo Swartz, around the exit from Europe, the exit from Poland, from the UK, from Ireland – as you mentioned.

Take us through from a strategy perspective where you now sit, coming into the role, having to manage partly the cleanup, but also charting a new way forward, effectively, for the Spar Group.

REEZA ISAACS: Just to be clear, we haven’t exited Ireland. We’ve exited Poland, Switzerland and the UK business. So Ireland remains very much part of the portfolio; currently in the past six months under difficult trading conditions it still managed to grow the top line and deliver a 3% margin.

So it’s a great business with a great team. It’s certainly not our intention to exit that business. Our focus is entirely on Ireland and South Africa currently.

We’ve got a JV [joint venture] interest in Sri Lanka, but that’s very small at the moment and it consumes no management time and no capital. We are supporting growing that business in a country where 20% of food retail is formalised.

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Spar’s Poland misadventure: Spend €1 to lose R4.2bn
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But otherwise the focus is entirely on South Africa with an outside focus on the groceries and liquor business.

JIMMY MOYAHA: Reeza, I want to get your thoughts on the stabilisation efforts from a business perspective. Obviously the KZN stabilisation programme is essential towards turning the business in the right direction.

Alongside that, there is obviously the business looking, as you mentioned, at the joint ventures and your overall growth strategies – the wholesale business and the wholesale focus coming into the next chapter of the business.

Take us through how those moving parts are shaping your six months. And, while we’re looking at that, I want to look at perhaps something more in line with your personal journey, having to navigate leading a business that is predominately in KZN. You were based in the Western Cape at one point.

How are you seeing the South African dynamic as a whole, having worked across the country?

REEZA ISAACS: In terms of the SA business and actually the group as a whole, I think one of my first tasks was to stabilise the leadership team and the management team.

I’m a firm believer in the right people in the right place and empowering them – but holding them accountable for delivery.

So the big appointments we made were Megan Pydigadu, who was a very experienced CFO, who was COO at Spar and has moved back into the CFO role, taken over from me. She doesn’t just bring the CFO experience; she brings turnaround experience to the group.

We appointed Jerome Jacobs, a very experienced Spar person with 30 years in the business, MD of the North Rand division, into the role of Grocery and Liquor Managing Director. He is firmly based in KZN – that was something that we were missing. We didn’t replace Max Oliver when he left.

And then we appointed a new CMO [chief marketing officer] in John Bradshaw.

Obviously marketing, promotions and brand are very important for Spar. We spend a huge amount on that, and we have an opportunity to reposition the brand, get the maximum out of our marketing expenses and support the retailers with growth.

As far as the SA dynamics and me being based in Cape Town, it’s really about the team. We are a decentralised business. We have six big centres that we operate out of – three inland and three coastal.

We also have the Irish business, we have the Sri Lankan business, and we have teams around the country. So we operate from wherever we are needed. I do lots of travel. I’ve been to Ireland; I’ve spent a bit of time in Johannesburg. I’ve spent an outsized amount of time in KZN – and so has the team.

But I think the key is that the grocery and liquor team have a leader that is based in KZN, and that is absolutely the case.

JIMMY MOYAHA: Reeza, before I let you go, I want to get your thoughts on what for you seems to be the biggest challenge confronting the Spar group at the moment. Obviously restructuring is never easy, and rebuilding and resetting are never easy, especially with a business the size of the Spar group.

What do you feel could potentially be the biggest challenge for the group at the moment?

REEZA ISAACS: The business is a special business. I have to say I’ve come to appreciate this business more and more.

It is a business that, in a way, is very simple. It needs to have operational excellence. It needs to buy smartly. It needs to warehouse goods, it needs to distribute efficiently, and it needs to manage a brand and do effective marketing.

And in so doing, it needs to support the retailers. We are the second-biggest grocery business at retail in southern Africa. We operate out of six countries in southern Africa.

The model is suited to South Africa with diverse communities, with informal retail, with independent retail – and a one-size-fits all retail chain doesn’t necessarily achieve that.

I absolutely believe in the model.

I think for us it is basically – and this may sound cliché – that we need to get back to basics, we need to get back to being the best at what we do and focus on the basics. I think we’ve been distracted by our international expansion.

We’ve been distracted by the SAP [software] implementation that didn’t go according to plan. We spent a lot of money on that, and it has created balance-sheet and other challenges for us which have taken up an inordinate amount of management attention.

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So we need to get back to what we do best, and that’s being the best wholesaler that can support our retailers and independent retail in the country.

JIMMY MOYAHA: Getting back to basics and ensuring that the business resets the fundamentals that need to be reset if the success of the business is to be attained.

We’ll leave the conversation on that note. We wish all of the very best, Reeza, to you and the team as you turn the business back on the right track.

Chief executive officer at the Spar Group, Reeza Isaacs, joined us to look at the first six months of the year, and what it is that they’re doing as a business.