Boxer today listed on the Johannesburg Stock Exchange (JSE), marking a milestone in its 47-year journey and positioning it for future growth.
This is the first listing of a soft discount retailer in South Africa and one of the most anticipated listings in nearly a decade.
The company said that the listing offers investors direct access to a soft discounter that targets South Africa’s high-growth value retail market, a sector brimming with potential.
The South African grocery retail market is valued at R1.1tn.
Boxer, in a statement, said it is well-positioned to take more share of the market as it continues to execute its winning strategy and roll out more stores.
Global strategy research house Futureworld estimated an untapped market potential of R105.5 billion grocery spend in Boxer’s customer target market in locations without a Boxer presence.
From humble beginnings in KwaZulu-Natal, and with just 35 stores and a turnover of R800 million at the time Pick n Pay acquired it in 2002, Boxer now operates over 500 stores across South Africa and Eswatini, with an annual turnover of close to R40 billion.
The listing enables Boxer to access local and international capital markets, supporting its ambitious plans to double its store footprint and grow market share.
Boxer has approximately 68% of the discount grocery retail market and has earned its market-leading position by leading the “soft discounter” proposition in the South African market.
This is aimed at delivering low prices for customers while adding additional value in the form of a slightly wider product offering than a hard discounter model, which typically offers customers only one product option. Boxer stores also offer a diversified proposition, including fresh, bakery and butchery counters, as well as in-store services, such as financial services.
Boxer’s high sales density, low-cost operating model, and relatively light asset base allows it to generate high returns on investment, with a return on invested capital of 26.5% for the 52 weeks ended 25 February 2024.
Adding to its investment attractiveness, Boxer has demonstrated its ability to successfully expand its store estate into new regions.
Marek Masojada, Boxer CEO, said, “The value retail sector has the largest number of customers and is the fastest-growing segment, despite limited spending power. We have high brand awareness and preference within this customer segment as our unrelenting focus on unbeatable value, quality, and service resonates with the communities where we trade.”
“Our deep understanding of our customers and their needs has been the foundation of our highly efficient operating model, which prioritises the investment of cost savings and operational efficiencies into lower prices and deeper value for customers.
“The listing is an incredible milestone for our business, recognising the team’s hard work over the years. We have a very focused strategy, which we have been executing for a number of years now, and we believe we are well-positioned to increase our penetration in the market in the coming years.”
Sean Summers, Pick n Pay Group CEO, commended Boxer on the remarkable achievements the team has achieved to date.
Summers said, “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.”
The Boxer listing also successfully completes Pick n Pay’s two-step Recapitalisation Plan, significantly strengthening its balance sheet.
The first step, a R4 billion rights offer in August 2024 was more than double oversubscribed, while the Boxer listing attracted significant investor interest, and was multiple times oversubscribed.
Shares valued at R8.5 billion were placed at the top end of the guide price, at R54 each. As a result, Pick n Pay will continue to hold more than 60% of Boxer.
Summers said completing the recapitalisation plan in nine short months was an incredible feat.
“This was well executed and highly successful, with tremendous shareholder support at the top-end of the pricing range for Boxer. Retaining a +60% stake in Boxer secures an investment in a highly attractive and valuable growth engine while raising the capital necessary to settle our long term debt and invest in Pick n Pay's core supermarket business."
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.
“Our plan is a multi-faceted and multi-year strategy. While there is still much to do, the significant progress achieved thus far is testament to the strength of our vision and the commitment of our teams. I am confident that they will continue to deliver with the same focus and dedication to strengthen the underlying performance of our Pick n Pay business.”
Watch Masojada speaking at the IPO on Thursday morning below:
BUSINESS REPORT