Spar Group Limited: The slate is clean.

Research evidence excerpt

Spar Group Limited: The slate is clean.

Key details on turnaround plans

Four additional key takes from the earnings call: 1) Revenue initiatives: eComm: Spar

realises it cannot mimic Sixty60. A new dedicated team in place to implement a more

localised proposition, catering for local assortment differences, community familiarity

and store-level identity. Growing private label: currently 22%, ambition to reach 30%. 2)

Margin trajectory: seeing sequential improvement in gross margin, turning positive in

Feb–Mar and KZN has delivered 3 consecutive profitable months. Operating margin: 3%

target still the ambition, but management will present a more concrete mid-term plan in

due course. 3) Cost measures: structural reset underway; benefits H2-weighted.

Measures include centralised procurement, logistics optimisation, marketing ROI

discipline, organisational redesign. Non-recurrence of one-time costs in H1 is low-

hanging fruit. 4) Significant key appointments made: New Chief Marketing Officer –

John Bradshaw mandated to fix marketing effectiveness and coordination (post Black

Friday failure), introduce a formal ROI framework (measure spend vs sales, footfall,

loyalty) and lead brand repositioning (“My SPAR”) and promo strategy reset.

Exhibit 1: Earnings missed expectations significantly but was already flagged in the May 27th

trading update.

Earnings deviation vs our last published estimates and consensus (ZARm)

1H26 Actual vs 1H26E VA Actual vs 1H26A Reporting metric BofAe BofAe cons cons

Group

Turnover 67 482 66 252 1.9% 66 448 1.6%

% growth y/y 3.2% 1.4%

Gross profit 7 134 7 069 0.9% 7 062 1.0%

Gross margin 10.6% 10.7% 10.6%

Other income 1 171 866 35.2% 858 36.6%

Operating expenditure -7 542 -6 675 13.0% -6 845 10.2%

Trading profit 763 1 261 -39.5% 1 074 -29.0%