Spar Group to sell its Swiss unit for US$59M as it shifts focus to South Africa

SWITZERLAND – Spar Group Ltd. has agreed to dispose of its Swiss subsidiary for US$59 million as the South African retailer concentrates on strengthening its domestic operations.

The Durban-based company stated that the buyer, Tannenwald Holding AG, will assume all liabilities associated with the Swiss arm, which will help reduce Spar’s debt burden.

This transaction follows the group’s earlier announcement that it intends to divest its businesses in both Switzerland and the United Kingdom after evaluating its European strategy.

Last year, the company completed the sale of its underperforming Polish operations, marking the start of its withdrawal from certain overseas markets.

In the UK, Spar is in exclusive negotiations with an unnamed but established business over the sale of Appleby Westward Group, which manages its operations in South West England.

The retailer said the potential UK buyer is well placed to expand Appleby Westward Group while maintaining continuity for employees, suppliers and customers.

In Switzerland, Spar engaged parties with significant local business exposure and knowledge of European retail and distribution before reaching the agreement with Tannenwald Holding.

According to the company, the Swiss subsidiary operates around 300 stores and generates turnover equivalent to about US$899 million annually.

Its UK unit, meanwhile, contributes approximately US$337 million to the group’s sales.

Once the disposals are completed, Spar will retain Ireland, which remains its largest international business, along with a joint venture in Sri Lanka.

Domestic competition driving strategy

The decision to scale back internationally comes as South African supermarkets face tougher competition within the country, especially in areas where modern retail is only beginning to gain ground.

At the same time, retailers are racing to develop digital sales channels, with Spar moving to expand its own online presence.

Shoprite Holdings Ltd., Spar’s larger competitor, reported last week that sales from its online platform grew 48 percent to US$1.1 billion, driven by the Sixty60 one-hour delivery app now available in 694 outlets.

Spar’s performance on the Johannesburg Stock Exchange has been weak, with shares falling 28 percent this year, making it the poorest performer on the FTSE/JSE Personal Care, Drug and Grocery Stores Index.

The company said it expects the sale of the Swiss business and potential UK exit to improve its financial position and sharpen its focus on the domestic market.

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