Boxer beats the blues

Today’s Ghost Bites will focus on the solid numbers that Boxer (JSE: BOX) achieved in a tough market.

Before we get there, I want to highlight the debt capital market on the JSE. Most people only think about the equity market, but there’s a deep institutional market ready to provide debt capital to local companies.

Motus (JSE: MTH) is the latest example, with an inaugural bond auction raising R1.8 billion that they can use to refinance higher-cost borrowings. The auction was significantly oversubscribed, with bid cover of 3.26 times.

The debt market is where Intengo Market operates, creating a more efficient debt ecosystem. In a recent podcast, Ian Norden of Intengo explained how one of their offerings can help corporate treasuries and finance teams with the JIBAR-to-ZARONIA evolution and many other debt complexities.

If you’re involved in corporate debt, then you should give this a listen.

Looking for something you’ve read recently? This link has all the previous editions of Ghost Mail (and Ghost Mail Weekender). Share it with your friends and bring them into the community!

Boxer (JSE: BOX) is both blessed and cursed to be seen as one of the best retailers on the JSE.

In a sector that has been absolutely obliterated this year, Boxer has been a standout performer with a year-to-date share price return of over 16.6%.

This means that when the company releases results, people pay attention.

For the 26 weeks ended 30 August 2026, turnover at Boxer grew by 6.3%. That’s a decent start to any set of retail results in South Africa.

The like-for-like growth of 1.4% was only a modest contributor to the story. The bulk of the growth came from the ever-expanding store network (up by 24 new stores to reach the milestone of 600 stores). Boxer allocated 55% of its capex budget to expansionary capex in this period, giving you another data point that shows how quickly the group is growing its footprint.

The like-for-like growth is actually stronger than it looks, as Boxer had to overcome “unprecedented deflation” in this period.

Although I think that this slide is trying to do too many things at once, the chart in the bottom left is really useful:

With deflation of 2.4%, the like-for-like sales growth was always going to have a bad time. That’s like running on a treadmill set to maximum incline and a demanding speed.

Still, Boxer managed to stay on track and achieve positive like-for-like growth thanks to volumes being up by 3.8%. That chart in the bottom right is comparing the growth to full-year rather than interim periods, but there’s still a downtrend in growth in volumes that investors should keep an eye on.

I’m going to highlight another very interesting slide from the deck that speaks to the growth in the liquor store business.

Despite many questions being asked about alcohol volumes worldwide, Boxer is seeing an opportunity to expand in this space. Note that they are actively increasing the percentage of Boxer Superstores that also have a liquor store:

Moving on from turnover and store expansion, we find that gross margin was 50 basis points higher at 20.7%. That’s a solid outcome in this environment.

Trading expenses as a percentage of turnover moved up by 60 basis points though, which is why trading margin was just 10 basis points higher at 4.2%.

Modest margin expansion becomes more impressive when you consider that diesel costs jumped by 32.4% year-on-year. Diesel is recognised in cost of sales and other trading expenses at store level.

The total diesel expense was R174 million, which is less than you might think in the context of total trading expenses of R4.2 billion and a much higher cost of sales number. Food for thought.

The “other trading income” line helped tremendously in this period, up by a meaty 34.7% thanks to value added services and the launch of a media and insights business. When you have strong distribution, you can do a lot of clever things with FMCG players. Other trading income of R260 million contributed more than a quarter of group trading profit (just over R1 billion).

Trading profit growth of 8.1% drove profit after tax growth of 12.9%, assisted by virtually flat net finance charges.

Once the adjustments are made for headline earnings, that metric grew by 9.1%. As the distortion of the IPO is now behind them, HEPS growth was 9.2%.

The outlook for the second half of the year comes with this warning label: “Trading visibility is low”.

With an uncertain short-term inflation outlook and all the macro risks, Boxer avoids giving precise guidance. Instead, the company guides for “improved” turnover growth in the second half and an ongoing store rollout.

Trading margin is even harder to forecast, as the diesel price is putting pressure on margins. Nobody knows when/if that situation will improve this year.

The second half of the year will be the final period under the stewardship of Marek Masojada. He will retire as CEO at the end of February 2027 after 33 years with the group. What a career!

In a solid example of succession planning, Justin Galloway is the CEO-designate after a career with Boxer that has spanned 17 years. He’s worked across finance, store operations and supply chain, so that’s a very encouraging sign.

Standard Bank (JSE: SBK) is deepening its business in Africa. The company is investing in OPay, a digital financial platform offering fintech solutions in Nigeria and other countries. This is part of OPay’s proposed IPO on the New York Stock Exchange.

Aside from the thematic appeal to Standard Bank of this investment, there’s the opportunity for OPay to distribute selected Standard Bank products and services via its platform.

The deal is expected to be less than 1% of Standard Bank’s market cap, so no further terms will be announced. When your market cap is R487 billion, it takes a very big transaction to be categorised under JSE rules!

ArcelorMittal (JSE: ACL) released a further cautionary announcement regarding the ongoing negotiations with the IDC. They describe the negotiations as being at an “advanced stage” for a potential transaction. There are many stakeholders in the industrial value chain waiting with bated breath for good news here.

Schroder European Real Estate (JSE: SCD) is in a wind-down strategy. The portfolio has gone backwards in the latest quarter, with the value down by 1.7% based on more conservative assumptions for the assets. It’s hard to overstate just how severely this company has underperformed its peer group on the JSE in recent years.

Do your own research and speak to your financial advisor. Nothing you read or listen to in Ghost Mail should be interpreted as financial advice. This is not a complete review of SENS and does not replace the need for you to refer to company announcements and reports yourself. Every effort is made to avoid errors in Ghost Bites and related podcasts, but I am only human.

The Nasdaq led Wall Street lower overnight. US futures are softer this morning as semiconductor stocks pull back from record highs and overbought territory.

Uncertainty over the path and timing of US Federal Reserve policy, alongside geopolitical risks in the Middle East and Ukraine, is providing a short term excuse for caution.

An attack on a Saudi airport is weighing on sentiment, as are doubts over whether the energy ceasefire between Ukraine and Russia will hold. While Trump was quick to announce the ceasefire over the weekend, Ukrainian President Zelensky said Russia continued to bomb Ukraine's power infrastructure as recently as yesterday.

Asian equities are mostly lower this morning, taking their lead from the US tech selloff.

US 10 year Treasury yields, although still elevated, are lower today, as is the dollar. Brent crude was flat in early trade but is holding closer to yesterday's highs than its lows. Gold and precious metals are firmer, supported by the marginally weaker dollar.

The rand is trading around R16.50/$ and we expect the JSE All Share Index to find support from local miners on the open.

This update is provided by Shaun Murison, Senior Market Analyst at randswiss.com. Connect with him on LinkedIn here and follow him on X here.

Key Indicators: 

USD/ZAR R16.52/$ | US 10yr 5.19% | Gold $4,191/oz | Platinum $1,706/oz | Brent Crude $105.40