Spar says it will be implementing a voluntary severance programme in certain parts of its business. The process will not, however, affect any of its retailers or services provided to its independent retail network.

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JSE-listed retailer SPAR said on Tuesday it would implement a voluntary severance programme in certain parts of its business, without disclosing how many jobs could be affected.

The process would not affect any of the group’s retailers or services provided to SPAR’s independent retail network.

The company said in a Stock Exchange News Service statement that the voluntary severance programme was part of its “ongoing focus on improving operational efficiency and competitiveness”.

The programme was part of a “broader reset” to align its cost base with trading conditions and ensure the group was structured to “support future sustainable growth”.

SPAR said in another statement that the voluntary severances formed part of a broader initiative to enhance operational efficiency and competitiveness.

New CEO Reeza Isaacs said the decision “reflects a disciplined approach to strengthening the business”.

“These are considered and necessary steps to ensure that SPAR remains a strong and competitive business. We are approaching this process in a responsible and respectful manner, while ensuring that we are well-positioned to invest in the areas that will drive future growth.”

Because the process was voluntary, it was aimed at giving “employees flexibility and choice”, while allowing the retailer to make necessary adjustments to its operating structure, said SPAR. It said that discussions with employees were ongoing and that the offer was available until the end of April.

SPAR said having an “agile and efficient platform” would help the group deliver better support to retailers.

Giving a “high-level” view of the announcement by SPAR, Protea Capital Management CEO Jean Pierre Verster said that for most businesses, the biggest cost line usually pertained to salaries.

“When businesses want to substantially decrease their cost base, they necessarily need to cut their payroll expense, and that seems to be what SPAR is doing.”

Chris Logan, MD of Opportune Investments, said SPAR was “under pressure in so many ways” that it was not surprising the retailer was cutting costs.

READ |More bad news for SPAR as steep discounts eat into its profits

SPAR had a difficult start to the year, with Angelo Swartz stepping down as CEO, effective from the end of February. This followed a trading update in the same month, showing that intense sales promotions during the Black Friday and festive trading periods, aimed at protecting volumes, had come at the expense of profit margins.

In recent financial reporting seasons, the group has grappled with the fallout from the initially disastrous implementation of a new IT system in KwaZulu-Natal, as well as poor performances in markets such as Switzerland and Poland.