Will SPAR survive?

Get ready for a double-dose of retail updates today.

Both Clicks (JSE: CLS) and SPAR (JSE: SPP) released important announcements at the start of the week, giving us valuable insight into the strategies playing out at each group. In my view, the former is responding to potential disruption in core categories, while the latter is fighting for survival after being disrupted.

Now, our local retailers may be far removed from the “Super Intelligence” meeting that Trump just held with the West’s most important tech execs, yet the same concept lies at the heart of both retail and hyperscaler strategies: data.

If you can use data properly, you can do incredibly well. If you can’t, then competitors will leave you for dead.

Artificial Intelligence? Super Intelligence? Absolute Lack of Intelligence? Decide for yourself when looking at the South African retail sector, where access to data is proving to be a key determinant of success or failure.

Keen to do more research on local stocks? Unlock the Stock is a wonderful way to do it. In the past few weeks, we’ve hosted CA Sales Holdings (JSE: CAA) and Redefine Properties (JSE: RDF) in separate sessions. This is a fantastic way to hear directly from management, with the subsequent Q&A session facilitated by yours truly and Mark Tobin of Coffee Microcaps. Get the latest videos here.

Looking for something you’ve read recently? This link has all the previous editions of Ghost Mail (and Ghost Mail Weekender). Share it with your friends and bring them into the community!

Competition in the local beauty space has become pretty ugly. Major apparel retailers are gunning for this category with its high margins and long shelf life.

Clicks (JSE: CLS) has been doing it for a very long time of course, having built their business around the “front shop” offerings like beauty. This puts a target on their backs.

The group isn’t just sitting around to wait and see what happens. Earlier this week, Clicks announced the acquisition of a further 35.3% in premium beauty retailer ARC Store.

This comes after an initial stake was acquired in 2021 and subsequently increased to 25.7% in 2025. Assuming competition authorities allow the deal to go through, the latest transaction will take the stake to 61% (i.e. through the control threshold).

The price for the 35.3%? A cool R507 million. The founders have unlocked serious money here.

ARC currently has 12 stores in major shopping centres. The Sandton City store is apparently the largest beauty store on the entire continent. ARC plans to increase the footprint to between 20 and 30 stores over the medium term, which tells us that this will remain a curated footprint focused on destination shopping (vs. trying to open hundreds of stores countrywide).

There are genuine synergies at play here, with ARC having been a partner of Clicks ClubCard since 2021. This is helping to drive sales in Clicks stores by ARC customers (up 16% in the past year – way ahead of group sales growth at Clicks).

Another important point is that Clicks stores act as click-and-collect points for ARC, giving its specialist beauty footprint much greater reach than would otherwise be the case.

To ensure continuity, the current executive management team has agreed to remain in place until at least 2028.

LVMH has done very well with Sephora. It will be interesting to see how Clicks does with ARC.

The share price at Spar (JSE: SPP) has come under renewed pressure after the company released an announcement regarding progress made in the operational turnaround.

A successful turnaround is going to depend on the relationship with the independent retailers. SPAR executives and guild representatives spent two days together recently to hash out priorities for both groups. I would’ve loved to be a fly on the wall for that! Instead, I have to rely on the SENS announcement and its carefully curated message around the strategy going forward.

There’s a clear focus on getting profitability right, particularly around proper measurement of promotions. South Africa is an incredibly promotional environment and there are some serious gorillas in the market (like Shoprite (JSE: SHP)), so Spar has to be very careful not to be drawn into price wars that it cannot possibly win.

Instead, they need to compete in the way that Spar has always done: by being a community-focused convenience retailer with an assortment that is different to what you’ll find at other stores. Case in point: my local SPAR has a particular yoghurt that we can’t find anywhere else. It also has by far the best butchery of any store anywhere near us. Being strong in a particular category can be enough to get people through the door.

The franchisees know this, but there isn’t much they can do if the wholesaler is falling apart at the seams.

Spar has been through a shocking period of disruption thanks to the SAP deployment and other issues. Committing to improvements in this regard was no doubt a focus area of the working session.

On-demand delivery is another area where franchisees have been left for dead by competitors. Spar has committed to a “refreshed SPAR2U proposition” with a pilot rollout planned for December 2026. A retailer advisory group is involved here, so that speaks directly to a more collaborative environment.

Another major project is the private label offering, with various initiatives underway to improve profitability. This is key to achieving better loyalty from the retailers, as Spar’s private label offering is only available from the wholesaler (unlike other products which Spar franchisees can buy wherever they want).

All of this sounds very sensible, but it’s much easier said than done.

The pressure on the share price was likely catalysed by a comment that FY26 performance will be below FY25. The pressure is primarily in Groceries & Liquor in Southern Africa, which is Spar’s core business.

Revenue growth for the 48 weeks ended August 2026 is slower than in the interim period, with Spar also having to navigate cost pressure in supply chain from elevated fuel costs. Franchisees are also struggling, with Spar experiencing elevated credit provisions (remember that the franchisees are the wholesaler’s debtors).

The business in Ireland (BWG) gets precisely one sentence in the entire announcement, with Spar noting the delivery of consistent growth in local currency.

It’s hard to see how a turnaround of Spar won’t include a sale of BWG. Getting out of Ireland would relieve some pressure on the balance sheet. Group net debt levels have reduced since the end of the interim period, but the pressure on earnings means that covenants are in focus. Spar expects to meet the revised covenant levels.

And in case you’re wondering, the company expects to appoint a new chairperson and non-executive directors by November.

I think there’s still a dim light of hope here (and I have a small speculative position in SPAR), but there’s no time to lose in making progress. Just look at this share price trajectory:

There’s good news for shareholders in Insimbi Industrial Holdings (JSE: ISB). An updated trading statement has confirmed that the company has indeed returned to profitability. For the six months to August 2026, they expect positive HEPS of between 4.48 cents and 4.74 cents. That’s a whole lot better than the headline loss per share of 1.30 cents in the comparable period!

Wesizwe Platinum (JSE: WEZ) has swung the other way in the six months to June 2026, with an expected headline loss per share of between -11.57 cents and -8.93 cents. HEPS in the comparable period was restated to 13.22 cents.

Selected director dealings:

Do your own research and speak to your financial advisor. Nothing you read or listen to in Ghost Mail should be interpreted as financial advice. This is not a complete review of SENS and does not replace the need for you to refer to company announcements and reports yourself. Every effort is made to avoid errors in Ghost Bites and related podcasts, but I am only human.

US markets closed modestly lower overnight in volatile trade, although AI related technology stocks managed to post gains, finding some support from Anthropic's intended IPO.

The yield on the 10 year US Treasury note reached 5.278% yesterday, near multi decade highs, before retreating to the 5.23% mark after the Fed's John Williams said that the central bank does not need to rush its next move. The comments saw the dollar soften slightly in late trade, which helped gold prices stage a partial rebound.

Oil prices have started to retrace as signs of recovering Middle East supply erode some of the war premium built into the market. Data from analytics company Kpler showed that regional crude exports rebounded to 16.3 million barrels per day in September, the highest level since the conflict with Iran began.

In Asia, Chinese equity benchmarks are flat this morning, while the Nikkei, Hang Seng and Kospi trade firmer, supported by gains in AI related stocks.

The rand is slightly firmer this morning against a softer dollar, and we expect a modestly positive start for the JSE All Share Index.

The afternoon session is likely to be busy on the back of US data, with the release of private payrolls and PCE inflation figures.

This update is provided by Shaun Murison, Senior Market Analyst at randswiss.com. Connect with him on LinkedIn here and follow him on X here.

Key Indicators: 

USD/ZAR R16.38/$ | US 10yr 5.23% | Gold $4,173/oz | Platinum $1,719/oz | Brent Crude $96.35