It’s an absolute pleasure to write about Boxer, arguably SA’s fastest-growing listed food retailer. Though it’s been around for almost 50 years, it has been listed on the JSE only since late last year, when it made its debut as part of a rescue package for the ailing Pick n Pay, its former owner. A total R8.5bn was raised in the private placement, which was the largest initial public offering (IPO) on the JSE in the past eight years. Aimed mainly at institutional investors, the offer was oversubscribed multiple times and whatever metric is used, the listing was a huge success.
The maiden listed results for the year to March 2 exceeded guidance on most metrics and in the normal course of events, should have been enough to ensure that the share price rallied strongly. Seemingly perversely, however, the share price weakened on release of the results, raising questions about what the market was expecting.
Making international discounter comparisons with Boxer is not easy because of SA’s unique position in the global economy. Though SA is pigeonholed among emerging economies, it is more of a hybrid of first, second and developing countries economies. So while the natural inclination is to compare Boxer with Germany’s Aldi or Lidl, that comparison breaks down under closer scrutiny.
They are comparable in offering cheap prices as a direct consequence of holding limited assortments of goods or stock-keeping units (SKUs). Boxer holds about 3,000 SKUs, while typical Aldi and Lidl stores stock about 2,500 SKUs. But that’s about as far as it goes. Aldi and Lidl are aggressively attacking all social strata with their offering, while Boxer (and its archrival Usave in the Shoprite group) is sticking to servicing low-end consumers.
And while Aldi and Lidl both stock mainly (about 90%) private label products, SA retailers are limited in this regard due to supplier constraints in the private label market. Boxer stocks about 25% of total SKUs as private label. And from a high-level viewpoint, Aldi and Lidl are part of extremely well-financed international groupings that aspire to cover the entire social spectrum of shoppers. Boxer is on its own and is staying in its well-defined niche at the lower end of the social spectrum, competing against Usave and a variety of unlisted independent operators.
For the pro forma 52 weeks to March 2, turnover rose 10.4% and by 5.6% on a comparable or like-for-like basis, by stripping out the impact of any new store space. Trading profit grew 7% and the trading profit margin was only slightly lower than guidance at listing, at 5.4%. Store space grew 9% and the group ended the year with 525 stores.
Profit after tax was R1.383bn, 0.1% lower than the previous year, translating into headline earnings of R1.407bn, also 0.1% lower than the previous year. But the weighted average number of shares in issue increased sharply after the listing, resulting in headline earnings per share (HEPS) declining 11.8% to 413.76c. No dividend was declared. Net debt, excluding lease liabilities, was R180m.
For the year to March 2026, there will be a further substantial HEPS dilution, as the full effect of the increased number of issued shares comes to fruition. This perhaps explains part of the disappointment in the market on release of the results, as there is likely to be a slight reduction in HEPS for the year to end-February 2026. No matter how good the top-line metrics are, the bottom line is not what is expected from a company of this quality.
For those investors who can see past the earnings per share hiatus next year, Boxer is sitting on a none-too-onerous price:earnings ratio of 15.4 times, which compares favourably with Shoprite’s 22 times and the 30 times of Clicks. Beyond 2026, it seems reasonable to believe that Boxer’s earnings and dividend growth will be predictably stable and it should deserve a premium rating over time.
• Gilmour is an investment analyst.
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