Spar Group has reaffirmed its revised SAP roll-out strategy, in which it is separating its finance systems migration from distribution centre operations in an effort to reduce disruption.
Meanwhile, the company confirmed in a trading update on Monday that it faces a R168.7-million lawsuit from a major franchisee family over the original botched implementation.
In a trading update, Spar said the amended approach — first announced last year — will see the group prioritise “capability enablement rather than distribution centre integration”. Where the initial plan integrated warehouse, finance and purchasing systems simultaneously, the revised strategy decouples these elements to minimise execution risk.
The finance transition to a single SAP environment with a unified chart of accounts will be completed in the current financial year, Spar said, establishing “a single version of financial data and enabling efficiency and governance improvements”. A subsequent phase will focus on drop shipment reporting, credit management and pricing governance.
The shift comes after the original SAP S/4Hana implementation at Spar’s KwaZulu-Natal distribution centre in early 2023 proved disastrous.
Against this backdrop, and as Business Day reported in late January, major franchisee the Giannacopoulos family has filed a R168.7-million lawsuit against the group in the Durban high court, alleging the failed roll-out caused severe supply chain breakdowns, empty shelves and heavy customer losses across its 46 Spar, SuperSpar and Tops stores. The family is claiming R142.9-million in lost gross profit for the financial years 2023 to 2025, plus R25.8-million in damages related to volume-based rebate schemes it says it could not meet because of the supply failures.
According to Business Day, industry estimates have put the broader cost of the SAP failure at about R1.6-billion in lost turnover and R720-million in lost profit by September 2023 alone.
Summons
In its trading update, Spar confirmed it has been served with a summons but noted that all KwaZulu-Natal retailers affected during the early SAP implementation period – bar the claimant and one additional retailer – have reached amicable settlements. The group said it had previously attempted to resolve the matter with the Giannacopoulos family but discussions failed, and that the current amount claimed “significantly exceeds” an initial claim of R5-million.
The SAP strategy revision also unfolds against the backdrop of significant leadership upheaval at the group. CEO Angelo Swartz resigned on 20 February, just 28 months into the role, and will be replaced by chief financial officer Reeza Isaacs from 1 March. Chief operating officer Megan Pydigadu will step into the CFO role. Swartz, who had headed Spar’s KZN division before becoming group CEO in October 2023, recently described the next phase of the SAP roll-out as “the single biggest risk” to the group’s recovery.
The leadership changes add to a period of considerable executive instability at Spar. Swartz’s predecessor, Brett Botten, departed after less than two years as CEO amid governance questions, and several senior executives – including IT leadership involved in the original SAP project – have also left.
Spar’s trading update painted a picture of a business under pressure. Wholesale turnover from continuing operations grew just 2.1% year on year for the 18 weeks to 30 January 2026, with Southern Africa managing only 0.9% growth. Gross profit margins in Southern Africa declined, which Spar attributed to an unfavourable sales mix, targeted Black Friday promotions, and continued investment in loyalty and margin recovery initiatives in KZN.
The group warned that operating margin performance for the first half of the 2026 financial year is expected to remain under pressure, with recovery “anticipated to be gradual and weighted toward the second half” as cost-realignment initiatives gain traction and wholesale volumes rebuild.
Spar said it has also identified structural initiatives to realign its cost base, including distribution network optimisation, centralised non-trade procurement, improved credit discipline and expanded private label capabilities.
Shares fall
The board said it plans to appoint a dedicated MD for the Southern Africa grocery and liquor segment – the group’s core revenue driver – to sharpen execution and accountability.
Spar’s share price has been under sustained pressure, falling nearly 35% over the course of 2025. Shares dropped a further 5% on Monday following the release of the trading update. – © 2026 NewsCentral Media
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