SPAR Group (NASDAQ:SGRP) executives told investors the company’s 2025 fiscal year was “transformational,” highlighting the completion of its exit from international joint ventures, a rebuilt leadership structure, and a renewed focus on growing its U.S. and Canada retail merchandising business.
On the company’s fourth-quarter and full-year 2025 earnings call, CEO William Linnane said SPAR has repositioned itself as a “nationwide retail service solutions company” centered on North America, with merchandising expertise that now includes an on-demand or “surge” execution model. CFO Steven Hennen detailed full-year results that included modest revenue growth but significant margin pressure, restructuring costs, and a larger net loss.
Portfolio shift and operational reset
He also described a 2025 leadership overhaul, including eliminating management layers, strengthening data foundations, and increasing analytical capabilities. The goal, he said, is “a leaner organization that can scale profitably,” supported by a “right-sized cost base” and automation intended to turn execution data into faster decision-making and improved client outcomes.
Strategically, Linnane framed SPAR’s positioning around combining “human action and AI-enabled intelligence,” arguing that retailers and brands may detect out-of-stocks and compliance gaps through technology, but still need “reliable, fast, verified action” in stores. He said SPAR is working to shift the industry away from “time-based labor” toward “intelligent, outcome-based action” that converges data, technology, and in-store execution in real time.
FY25 financial results show revenue growth but margin compression
Hennen reported FY25 net revenues of $136.1 million. He noted the company changed its reportable segments after exiting “several global joint venture arrangements” and now presents geographic segments for the United States and Canada. Prior-year segment information was recast to align with the new presentation.
On a comparable basis, Hennen said full-year revenues for the United States and Canada increased 3.3% over 2024. U.S. net revenues rose 3.9% to $122.1 million, while Canadian sales were “essentially flat” at $14.1 million.
Gross profit declined to $21.7 million, or 15.9% of revenue, compared with $33.6 million, or 20.5% of revenue, in 2024. Hennen attributed the gross margin compression primarily to a shift toward remodeling work, which he said “inherently carries higher labor and travel costs,” along with market-driven wage pressure and workforce alignment changes.
Selling, general, and administrative expenses were $32.2 million, or 23.7% of revenues, compared with $33.9 million, or 20.7% in the prior year. Hennen said SG&A included approximately $7 million of one-time costs and out-of-period write-offs in 2025. He added that the company expects an annual SG&A run rate of approximately $25.5 million to $26.5 million, excluding unusual and non-recurring costs.
SPAR recorded restructuring costs and severance of $4.8 million for FY25, contributing to an operating loss of $16.9 million, compared with operating income of $700,000 in the prior fiscal year. Net loss attributable to SPAR Group was $24.6 million, or $1.04 per diluted share, compared with a net loss of $3.2 million, or $0.13 per share, in 2024.
On an adjusted basis, net loss attributable to SPAR Group was $10.7 million, or $0.45 per diluted share, compared with $707,000, or $0.03 per diluted share, in the prior period. Consolidated EBITDA was negative $16.5 million versus $3.5 million in the prior year; Hennen noted 2024 included a $2.5 million gain from the sale of businesses. Consolidated adjusted EBITDA was negative $8.6 million, compared with positive $6.7 million in the prior year.
Liquidity and cash flow
As of Dec. 31, 2025, Hennen said the company’s balance sheet “remains solid” with positive working capital of $14.7 million, excluding the balance owed on the line of credit and the current portion of long-term debt. Cash and cash equivalents were $3.3 million.
For the 12 months ending Dec. 31, 2025, net cash used by operating activities was $18.4 million, Hennen said.
ReposiTrak partnership and on-demand merchandising
Linnane highlighted a strategic partnership announced March 26 with ReposiTrak, which he described as adding “the intelligence layer” to SPAR’s ability to dispatch teams quickly to stores. He said the model is designed for situations where promotional or seasonal products need to get on shelves immediately and can’t wait for scheduled labor.
SPAR’s “surge or on-demand merchandising,” according to Linnane, allows teams to be dispatched “in real time to any store anywhere in the country,” providing what he called a flexible labor buffer. He said the ReposiTrak partnership brings capabilities including out-of-stock detection, perpetual inventory accuracy, and route optimization so dispatch decisions are “data-driven, not reactive.”
Linnane said the approach is applicable across multiple retail formats, including grocery, mass, club, dollar, convenience, and specialty retail in the U.S. and Canada, depending on the data source. During Q&A, Linnane confirmed the partnership is “live,” with meetings and conversations already underway.
FY26 outlook and business mix shift
Management issued FY26 guidance calling for revenue of $143 million to $151 million and gross margin improvement to 20.5% to 22.5%. Linnane said the expected margin improvement is “primarily driven by our service mix,” with a growing percentage of merchandising work relative to remodel work.
He said SPAR is encouraged by its pipeline, driven by “wallet expansion from existing clients and market share gains this year.” He also cited investments in cloud and ERP infrastructure, a partner-led technology strategy, and the company’s SPARview mobile platform used to collect project data and communicate outcomes.
In response to a question from Benenson Capital’s Ross Davidson about fourth-quarter softness and how results may inflect into 2026, Linnane attributed part of the fourth-quarter revenue decline to project timing. He said SPAR has “purposely pivoted the business development and sales team to really focus on the merchandising going forward, given the margin difference between the two business,” adding the company will still pursue remodel work “if it’s profitable.”
On quarterly patterns, Hennen said the guidance is annual, but noted the fourth quarter is “typically our slowest quarter of the year.” Linnane added that some field management costs are “somewhat semi-fixed,” affecting gross margins.
Closing the call, Linnane said SPAR is “laser-focused on building a profitable business that generates free cash flow,” and he told investors he looks forward to sharing first-quarter results and providing updates on strategic initiatives in the coming months.
About SPAR Group (NASDAQ:SGRP)
SPAR Group, Inc is a U.S.-based provider of retail merchandising and business services to consumer packaged goods companies. Through its nationwide network of local merchandisers, the company delivers in-store product stocking, planogram compliance, retail audits and promotional installations. SPAR Group’s field teams work directly in grocery, pharmacy, big‐box and convenience channels to ensure optimal product placement and availability at the point of sale.
Beyond traditional merchandising, SPAR Group offers retail data collection and analytics to help clients monitor shelf conditions, pricing accuracy and inventory levels across multiple retail outlets.
