SPAR Faces R170m Legal Claim, Share Price Slips to 2024 Low Amid SAP Fallout
SPAR shares face renewed pressure after a legal dispute over past software issues reignites investor concerns.
Quick overview
- SPAR shares fell 3.74% amid a legal dispute over a failed SAP software rollout, extending a long-term downtrend since 2018.
- The Giannacopoulos family is suing SPAR for R170 million, claiming the software implementation caused significant operational disruptions.
- Despite a recent financial update showing improved revenue and profit, investor confidence remains low due to ongoing structural challenges.
- SPAR's share price has declined nearly 38% in the past year, reflecting persistent bearish sentiment in the market.
SPAR shares face renewed pressure after a legal dispute over past software issues reignites investor concerns.
SPAR Shares Fall Amid Legal Action
SPAR Group (JSE: SPP) saw its share price slide 3.74% on Thursday, extending a long-term downtrend that has persisted since 2018, when shares traded near R227. The decline followed news that the Giannacopoulos family is suing SPAR for R170 million over a failed SAP software rollout.
Background of the Dispute
The lawsuit stems from the KwaZulu-Natal distribution centre, where the Giannacopoulos-owned franchises claim that SPAR implemented SAP enterprise resource planning software unilaterally. Legal documents indicate the rollout caused distribution delays, interrupted stock deliveries, and lost sales.
The claim comes more than two years after SPAR began rolling out the software in January 2023, highlighting the long-lasting operational impact of the ERP issues.
Financial Implications
SPAR acknowledged in its 2023 financial statements that the SAP rollout contributed to R1.6 billion in lost turnover, though the KZN centre returned to full operation in September 2023. The Giannacopoulos Group seeks at least R170 million in damages, with SPAR confirming that its legal team is reviewing the case.
Share Price Trend Remains Under Pressure
Despite today’s bounce, the broader trend through 2025 remains decisively bearish. SPAR’s share price has fallen nearly 38% in a year and has more than halved since 2021, when it traded above R200. In 2004 we saw a rebound but the selloff resumed and now SPPJ price is facing the 2024 low of R85.
SPPJ Chart Weekly – Pressure Is on the Downside
Technical indicators continue to reflect this weakness, with key moving averages acting as persistent resistance across multiple timeframes. For sentiment to shift meaningfully, buyers will need to drive the price decisively above these levels.
SPAR SSP Group PLC FY2025 Earnings Call – Key Highlights
Financial Performance
- Revenue increased 8% to GBP 3.6 billion, reflecting broad-based strength across regions.
- Operating profit rose 13% to GBP 223 million, supported by improving efficiencies.
- Operating margin expanded by 30 basis points, emphasizing disciplined cost control.
- EPS climbed 25% to 12.5p, driven by stronger profitability and margin gains.
- Free cash flow reached GBP 80 million pre-dividend, marking a shift to improved cash generation.
Balance Sheet & Capital Structure
- Net debt-to-EBITDA reduced to 1.6x, demonstrating continued deleveraging.
- Return on capital employed improved 100 bps to 18.7%, signaling better asset productivit
- Proposed dividend increased 20% to 4.2p per share, reflecting confidence in future earnings power.
- GBP 100 million share buyback launched in October, enhancing shareholder returns.
Operational & Strategic Developments
- Like-for-like sales up 4% in the first two months of FY26, indicating a solid start to the new year.
- Capital expenditure capped at GBP 200 million for FY26 as management prioritizes capital discipline.
- Net contract gains contributed 4% to annual sales growth, strengthening long-term revenue visibility.
- Impairment charges of GBP 117 million, mainly from France and Germany operations.
- GBP 30 million cost reduction program targeting corporate and regional overheads, supporting margin expansion going forward.
Outlook and Investor Sentiment
Despite SPAR’s recent financial update offering a cautiously improved tone, structural challenges, including legacy operational missteps, continue to weigh on investor confidence. The legal dispute serves as a reminder that past system failures can have ongoing repercussions for both financial performance and market perception.
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