Boxer has seen an uptick of between 50% and 100% in sales at the underperforming Pick n Pay stores it took over. The retailer, which listed in November 2024, is also not holding back on its expansion drive.
Boxer, partially unbundled from supermarket giant Pick n Pay, was the biggest IPO on the JSE in eight years; it was oversubscribed multiple times at the top end of the offer price range.
Its growth prospects have largely been viewed as exciting, though the group’s share price has softened markedly after touching a high of R73.97 in late March. The soft discounter has earmarked R1.2bn for store expansion and distribution centres. At the same time, it can access stores from major shareholder Pick n Pay — stores that better suit its demographic and which it can buy at book value.
Boxer took over eight supermarket and seven liquor stores during the course of the year from Pick n Pay (which holds 66% of Boxer). Some stores have gone through extensive changes, others have been given a lighter refurbishment. Ranges within stores have been reduced from 10,000 stock-keeping units to about 3,000 (the norm for Boxer), while there’s been an emphasis on commodities and groceries as well as multi-buy promotions.
In an investor call presentation on its annual results, CEO Marek Masojada said: “We are continuously in conversation with Pick n Pay for possible conversions. We are hopeful on getting a couple more for the year.”
The retailer added 48 net new stores for the 53 weeks to March 2 2025, and now has 525 stores. It plans to open 60 new ones this full financial year across the superstore and liquor formats (25 superstores and 35 liquor stores) in underserviced areas in cities, towns and rural regions.
Masojada said liquor is the fastest-growing segment of the business. The liquor stores are on average 200m², against 2,000m² for the superstores. He said Boxer holds a 7%-8% market share of the formal market.
It was better than expected on headline earnings, but the outlook was a bit more muted than what some were hoping for
— Cobus Cilliers
Apart from access to existing and underperforming Pick n Pay sites that suit its target demographic, Boxer now holds more weight among landlords. Masojada said the upside of being listed is that the property industry has more insight into Boxer.
Still, dealing with the investment community has taken some getting used to, he said. “Investors ask very searching questions about the business which exposes us to our competitors … our biggest competitor does not give any detail about the structure … There’s a lot that you can learn by looking at the numbers.”
Results were solid and analysts welcomed them, though the share price dropped after the release. Some market watchers argue that the stock is pricey, and that the market did not pay attention to the impact that more shares in issue would have on the bottom line.
Boxer reported an 11.8% fall in full-year earnings in its first set of results as a publicly traded company, as headline earnings were diluted by the 157.4-million new shares issued when it listed.
The group reported an encouraging trading margin of 5.4%, more than the 5% guidance set before its listing. Sales price inflation was 0.3% in the period, which Masojada said is great for the consumer but challenging for the business. Boxer expects pressure on trading margins as cost price inflation exceeds sales price inflation.
Boxer generated a reassuring R760m of free cash flow, after both maintenance and expansion capex.
Cobus Cilliers, equity analyst at All Weather Capital, says Boxer delivered a good set of results. “It was better than expected on headline earnings, but the outlook was a bit more muted than what some were hoping for.
“I think the decrease in headline earnings is not of concern, it’s not trading profit. Like-for-like sales [growth] was mid-single digits … some were hoping for a higher number than that.”
A significant proportion of Boxer’s turnover is driven by promotions. Masojada offered some colour on a promotional collaboration with Capitec: “A fantastic deal for Goldi Chicken, one of the most influential brands in the lives of our customers.” Boxer customers can swipe a rewards programme card, pay with Capitec and get R50 off their next spend.
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