Boxer debuts on JSE, outshines parent Pick n Pay in value

Discount retail chain Boxer made its debut on the Johannesburg Stock Exchange (JSE) this week in the biggest local listing on the main bourse this year. 

The listing on Thursday, at R54 a share, earned Boxer’s parent company Pick n Pay R8.5 billion. Boxer has a market capitalisation of R24 billion, above Pick n Pay’s R22 billion. 

“Its really like the early beginnings of Shoprite, when they started out, and just the expansion that Boxer will be able to achieve over the next couple of years is really tangible,” said Maurice Madiba, head of primary markets at the JSE. 

Boxer and Shoprite both target the low-income consumer market.

“Boxer is more like Shoprite in the sense that they are a retailer that has different suppliers, for example, in some of the rural communities, they get their fresh produce from the local farms. They also have such big buying power that they can offer that to consumers at reasonable prices,” Madiba told the Mail & Guardian. 

Boxer first opened its doors in Empangeni, KwaZulu-Natal, in 1977. Forty-seven years later, it boasts over 500 stores, trading throughout South Africa’s nine provinces, as well as neighbouring eSwatini. 

Pick n Pay acquired Boxer in 2002, under the leadership of Sean Summers, during his first stint as chief executive. At the time, it had 35 stores and annual sales of R800 million. 

Now its annual turnover is R40 billion.

It was possibly destined that Boxer would be separately listed during Summers’ second tenure at Pick n Pay. The parent company has faced significant financial and operational challenges in recent years, driven by several factors, including increasing trading expenses and declining profits. 

Even property companies have recently distanced themselves from Pick n Pay with landlords opting not to renew leases, due to the company’s underperformance, the M&G has reported. 

Operational missteps, including an ineffective strategic plan launched by former chief executive Pieter Boone in 2022, further hindered Pick n Pay’s recovery efforts.

The company has struggled to modernise its core supermarket business, although  segments like Boxer have shown relative strength, offering some hope for recovery​. In an effort to turn things around, Boone was given the boot and Summers brought back into the fold.

“I feel an extraordinary sense of pride in what they have grown to become. We saw the potential in Boxer over 22 years ago, when we first bought the company, and I have no doubt it will grow as a formidable contender in the retail sector. It’s come full circle,” Summers said in a statement after Boxer’s listing.

Pick n Pay retains a 65.6% stake in the business. 

“This is a positive outcome for Pick n Pay as you are able to see the value creation that this unbundling brought. This is one of the biggest trades I’ve seen open up,” Madiba said. 

In a statement, Pick n Pay said the Boxer listing significantly strengthened its balance sheet. 

“The capital raised will convert interest costs to interest earning as the business strengthens its balance sheet and holds surplus cash reserves. 

“This will provide the funds required for the Pick n Pay turnaround plan, including investment into new stores, store refurbishments, range optimisation, technology, innovation and staff training and development,” it said.