Can Boxer KO Retail Rivals?

Giulietta Talevi from Currency asks: Can Boxer take on the big players? With its upcoming JSE listing, this rising retailer is gearing up to give Shoprite some serious competition.

• Boxer is expanding rapidly! The retailer plans to double its stores in the next 7 years, with annual sales growth hitting a strong 19%.
• Analysts are excited about Boxer’s unbundling, valuing it between R24bn and R30bn, which could give Pick n Pay a significant financial boost.
• Can Boxer outdo Shoprite? It’s ready to challenge Shoprite’s Usave division, but its bold growth plans come with some risks too.

Pick n Pay’s gleaming jewel could finally be the contender to the Shoprite juggernaut that its former parent once was. With its listing imminent, Currency canvassed a clutch of retail analysts for their views on the retailer

It was a big number bonanza last week, when Boxer invited South Africa’s analyst community for a six-hour tinkerfest under the retailer’s metaphorical hood, ahead of its listing on the JSE later this year. 

From what’s been shown so far – including the likely valuation of the asset – those brave enough to buy Pick n Pay shares now would essentially be getting the rest of the group, once Boxer is hived off, for free. 

Boxer’s growth, for starters, is arresting: from a store base of 477 now, it wants to double in size within seven years, with its sales growth rising by double digits every year.  

The retailer, which is targeting South Africa’s less wealthy consumers, has excellent form in this regard: sales have grown at 19% annually over the past three years. In its most recent financial year, it clocked up R37.4bn in sales and R2.1bn in profit.  

For context, that puts its trading profit margin at 5.6% – way higher than its parent Pick n Pay and above even Shoprite’s 5.5%.  Shoprite, incidentally, trades at profit margins that are not only the envy of South African grocery groups, but those the world over.  



FY2021 impacted by Covid-19 and FY2022 impacted by civil unrest in South Africa. Graph from Overview of Boxer 2024. Source: Pick n Pay Holdings 

Given all this, it is unsurprising that unbundling Boxer is a surefire way to raise money for the Pick n Pay group. Fingers crossed, the proceeds from Boxer’s listing, along with the R4bn raised in the rights offer, should return Pick n Pay to a net cash position. That would be some turnaround from six months ago, when there were real fears it could go bust. 

While Pick n Pay has yet to say how much of Boxer it will sell to investors – the market expects it to list between 30% and 49% of its stake – the fact that it’s hoping to raise R8bn gives you an idea of what Boxer alone would be worth. Analysts who spoke to Currency pegged the value at between R24bn and R30bn. 

“Once the Boxer Unbundling occurs, people will be able to see what the business is worth inside Pick n Pay. And then maybe people will realise: we’re buying Boxer and getting the rest of Pick n Pay at a negative value,” says Cobus Cilliers, an analyst at All Weather Capital. 

When you consider that Pick n Pay’s current market capitalisation is R21bn, this would mean its entire store base outside of Boxer is worth less than nothing – which is absurd. 

All Weather is unsurprisingly positive on Pick n Pay’s stock.  
So is Umthombo Wealth’s Alexander Duys, who says: “We expect demand for Boxer shares to be very high, so it’s prudent in our view to get exposure to Boxer by buying Pick n Pay shares in advance of the [JSE listing]”.

Cilliers puts the credit for the turnaround at the door of CEO Sean Summers, who was brought back into the company a year ago to salvage what was once South Africa’s premier retailer. 

“If you spoke to people a few months ago, people were talking as if Pick n Pay was going to hit the wall,” he says. Today, “it’s a very different conversation”. 

Once Boxer is out the picture, the focus will shift to the rest of Pick n Pay’s portfolio – 349 corporate stores, with 100 “problem” stores that must be closed or converted. 

Cilliers points out that the cash the company will raise from Boxer will buy it a lot of time to figure out what to do with those stores. 

“Sean is going to be conservative and pragmatic as to how he converts these stores. There’s a lot he can do,” he says. 

The welfare factor 
But back to Boxer, which first opened its doors in KwaZulu-Natal in 1977.  

In 2002, Pick n Pay swooped, buying an entry into the mass discount market, and a management team that has stayed the course. CEO Marek Masojada has been with the company for 31 years, six of them as chief executive.

(Currency asked for an interview with Masojada but was told there’ll be no media engagements ahead of the Undbundling– which suggests the company has got some way to go to fully embrace its new public role.) 

Boxer is a “soft discounter”. That is, it sells a limited range of goods that bridges the gap between hard discounters – shops that carry very limited ranges and offer no fresh foods – and traditional supermarkets, which carry everything. 

The group is hugely sensitive to social grant payments, which rose to R250bn last year, going to almost half South Africa’s population. Boxer expects this number to hit R300bn by 2027. 

Boxer could expand much further too. At the moment, it is ubiquitous in KZN and the Eastern Cape, but hardly a contender further south.  

“It does seem like a proper gem if you look at the top-line growth and the store growth potential they’ve highlighted,” says Ninety One analyst Achumile Mashalaba.  

Mashalaba is from the Eastern Cape, but is now based in the Western Cape. “You don’t really see many Boxers [here] unless you go and visit the townships. So if you look at the map, the growth potential they are talking about is there.” 

For a food retailer, store growth helps drive top-line growth, which in turn helps lift profit margins; being bigger means companies get better rebates from suppliers. 

Mashalaba says the question is whether, once it has grown to 1,000 stores, it will be able to generate the same margins. “Other competitors won’t sit still.”

This is also where Duys sees potential pitfalls.  

“Boxer has ambitious growth targets and that does come with execution and capital allocation risks. Managing costs and working capital won’t be easy, and if not done right could lead to major disappointment for shareholders,” he warns. 



Store location data as at FY2024: Map from Overview of Boxer 2024. Source: Pick n Pay Holdings 

A challenge to Shoprite 
Probably the closest competitor to Boxer is Shoprite’s Usave division, which grew sales 13.2% in the year to July, from 463 stores. Shoprite doesn’t split out Usave’s numbers, but together with the Shoprite brand, it brought in sales of almost R100bn. 

Asked whether he’d buy Boxer or Shoprite, Cilliers says it’s a close call. 

“The metrics are very good at Boxer; some of them are better than Shoprite depending on what you look at. Shoprite executes exceptionally well, they’ve got very good technology, but within the specific slice where Usave [trades], Boxer is very competitive. And I think in some formats I think they’re probably a little better,” he says. 

One of the striking features of last week’s presentation is how independent Boxer is to the wider Pick n Pay group. “It is run very differently to how Pick n Pay is run: it’s a very small head office unlike Pick n Pay which has a monster head office,” says Mashalaba. 

There are a few overlaps – such as in IT systems, and accounting – which may diminish over time.  

Cilliers sees Boxer as a “unique” asset.  

“It’s perfectly positioned for the South African market and it’s going to trade at a higher multiple – similar to what Shoprite trades at, maybe even a premium. But we have to see what happens with the listing price.” 

While it’s good practice to set the listing price below the maximum of what you could get, to see a share price bounce at the beginning, Duys reckons the institutions that have been invited to get a look in will fall over themselves for a piece of the action. 

“In such a scenario Pick n Pay Group wouldn’t need to sell too much of their stake, which will be very value enhancing for Pick n Pay shareholders,” he says.  

And with a newly perky balance sheet and management attention entirely focused on fixing the core group, “the probability of a successful turnaround seems more plausible”, says Duys.  

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