Retail details

It’s been a very busy week. To avoid obliterating your inbox with reams of updates, I’ve tried to focus on the more interesting stories and themes each day.

Today, I’m dealing with consumer-focused stocks, including a few of the local retailers.

If you speak to executives in retail, almost all of them have the same crestfallen face. The level of competition in local retail is extraordinary. To make it worse, the economy has been bowling Rabada’s 155km/h thunderbolts all year. The Aussies can’t cope with it and neither can the share prices of our retailers.

I’m not sure where the bottom is. I don’t think anyone really knows. But what I do know is that ongoing pain at the pumps is not going to do our retailers any favours as we head into the all-important festive season.

Before we get to the juicy retail updates, I’ve got some new DealMakers goodies for you. There are useful summaries on local M&A, local corporate finance and deals in Africa.

US earnings season is firmly underway, with the banking and tech names all over the headlines. In the latest episode of Magic Markets, we focused on the themes coming through from the banks.

Specifically, we looked at Wall Street vs. Main Street, with the examples of JPMorgan and Bank of America. It’s a great discussion for anyone interested in understanding what makes the US giants tick. Listen on YouTube or access the transcript and other ways to listen here.

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!

For this retail-focused segment, let’s begin with Pick n Pay’s (JSE: PIK) trading statement for the 26 weeks to 30 August 2026. The group managed to “moderately reduce trading losses” in the Pick n Pay segment. It’s a very slow turnaround, but at least that’s the correct direction of travel.

The trading profit at Boxer (JSE: BOX) filters through into the Pick n Pay group numbers, offsetting some of the pain in the core segment. This stake continues to provide some support to the Pick n Pay share price, thereby preventing total chaos.

Just imagine what this Pick n Pay line might look like without the Boxer line giving it some help:

The combination of better profits at Boxer and reduced losses at Pick n Pay has led to a reduction in the group headline loss per share for the period of between 25% and 35%. Read that carefully though: it’s still an overall headline loss.

To Pick n Pay’s credit, the company acknowledges that this percentage looks more exciting than it really is, as the absolute value of the headline loss in the base period was relatively small (R439 million). When you’re dealing with smaller numbers, it’s easier to achieve bigger percentage movements.

An important additional insight is that the s189A consultation process has been withdrawn after agreement was reached with SACCAWU. More information will be provided when results are released on 26 October.

I can’t help but wonder if the union took a look at the broader retail environment in South Africa and realised that its members are quite lucky at this stage to have any jobs at all.

A more constructive relationship between companies and unions is one of the things that would do our country a lot of good. Nobody wants to be in this situation, but there’s no point at all in killing what’s left of the goose that sometimes lays an egg.

From grocery to healthcare, let’s deal with the Clicks (JSE: CLS) results for the year ended August 2026. Even this share price hasn’t been spared this year, down 37% over 12 months.

Momentum was already negative before the interim results earlier this year. It then got worse, as the market had to stomach a significant slowdown in the Clicks growth rate. With the release of results for the full year, the bad news is that the second half of the year was even tougher.

After group turnover grew by 7,4% in H1, the full-year result was growth of just 5.4%. Retail turnover was up 5.4% in H1 and 4.2% on a full-year basis. UPD also suffered, with growth of 13.0% in H1 vs. 9.2% for the full year.

Despite a visible deterioration in the business, Clicks continued to expand its footprint. We’ve seen this play out in the apparel space, and I really hope we won’t see Clicks make the same mistake as the clothing retailers. You cannot expand your footprint to fix a retailer. The fight has to be won on a like-for-like basis, with Clicks clearly struggling in this highly promotional environment.

Rather than opening more of the same Clicks stores, I actually prefer the concept of the investment in ARC Store. Premium beauty is a smart place for Clicks to play, as it gives them the opportunity to execute a differentiated destination retail strategy. The deal remains subject to approval by the Competition Commission.

Another interesting strategy is the launch of KwaMakhi, a neighbourhood convenience brand targeting South Africa’s township market. This is a red-hot market that retailers are all trying to get a piece of. At least Clicks has recognised that they would need to address this opportunity in a differentiated manner, although that’s no guarantee of success.

The silver lining is that improved supply chain efficiencies drove a 90 basis points increase in the retail margin. Ironically, the distribution business suffered a 90 basis points decline, impacted by lower single exit price adjustments and the non-renewal of two bulk contracts. It feels like those movements should be the other way around, but it is what it is. Overall, the group’s total income margin declined by 10 basis points.

At the bottom of the income statement, you’ll find HEPS growth of 4.4% for the year. That’s a horrible slowdown from the growth of 8.1% in the first half.

The outlook isn’t much better, with Clicks noting that the retail trading environment is expected to remain highly competitive. Despite this, they are planning to open another 40 – 50 new stores in 2027.

I will be paying increasing attention to like-for-like sales at Clicks, as we have a long history of South African retailers trying to paper over the cracks in their business by expanding the footprint.

We’ve dealt with grocery and we’ve dealt with pharmacy, health and beauty. We now move on to an even more discretionary category: DIY and home improvement.

As you can imagine, things haven’t been fun in the latest period in that space.

The only good thing I can say about my very small position in Cashbuild (JSE: CSB) is that it has done a fabulous job of getting smaller over time. The share price is down 22% over the past year.

When things eventually settle down in the fuel price and the world in general, it’s the kind of stock that might do very well. The lesson I’ve learnt is to be less optimistic about South African consumers in general.

The latest quarter reflects a decline in total revenue of 2% in Cashbuild South Africa. Existing stores in the country fell by 3%. That’s a horrible underpin, with local volumes in the red.

If you include the other businesses (P&L Hardware / Amper Alles / Rest of Africa), you’ll find total group growth of just 1%. I am fairly sure that expenses are increasing at a higher rate than that, so profitability must be a stress at the moment.

Yuck.

Moving on, there’s one more consumer business I want to cover, especially as I have cricket on the brain. Canal+ (JSE: CNP) is a lot broader than just South Africa of course, but consumers are taking strain everywhere at the moment.

I subscribed for the new R399/month sports package so I could watch the Proteas this week. It was absolutely worth it, plus the app seems to be better than before (not much of a benchmark, but still). The problem is that sports events don’t necessarily create sticky subscribers. I doubt I’ll keep my subscription in the absence of a Proteas tour, as I couldn’t care less about football.

Now, if you look at the extensive recent share purchases by directors, you would assume that the business is flying. In reality, guidance for the full year is for flat revenue growth, with pressure in Europe being offset by growth in Africa and Asia.

They are chasing cost synergies to drive an improvement in metrics like profit and free cash flow, but it’s hardly an easy environment right now.

If you adjust for the MultiChoice deal in the base period, then revenue in Africa and Asia is up 3.1% year-to-date, while Europe is down 1.4%. The situation in both regions has accelerated in Q3, with 6.9% growth in Africa and Asia vs. a 1.8% decline in Europe.

When things are tough, there tends to be a snowball effect regardless of the direction of travel of that snowball.

But how much of the Africa and Asia growth is actually due to MultiChoice? After all, Canal+ had businesses in these regions before that deal.

Alas, when you dig all the way down to South Africa, you’ll still find a decline in subscription revenue. The dip in Q3 on a like-for-like basis was 2%, an improvement from the decline of 3.4% in the first half of the year. The Proteas will need to keep this up.

The third segment in the group (i.e. other than the regional segments above) is Content Production. This is the box office and studio business, reminding us how vertically integrated Canal+ actually is. This segment grew revenue by 5.4% year-to-date and 4.3% for the quarter.

As a sign of the crummy times we are currently living in, the group ends off with the following comment: “While the Group is cognisant of the macroeconomic and political backdrop, its medium-term guidance remains unchanged.”

Cognisant, indeed.

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.

US equities closed mixed overnight, with the Nasdaq suffering its heaviest losses since June as renewed concerns over AI spending and a fresh surge in oil prices weighed on technology shares.

The Nasdaq Composite fell 2.60% and the S&P 500 lost 1.21%, while the Dow Jones Industrial Average and Russell 2000 managed modest gains.

Worries over AI spending and the cost of capital resurfaced, sending semiconductor and hyperscaler shares lower, with Meta leading the decline as its plans to ramp up AI investment fuelled doubts over whether that spending will pay off.

US Treasury yields retreated sharply overnight as investors sought safety in bonds, with the 10 year yield falling back below 5%. The dollar is broadly steady against major currencies this morning, while US futures are little changed ahead of today's October PMI releases.

The tech rout has carried into Asia, where most markets are trading lower. South Korea is the region's worst performer, with the KOSPI down 2.1% at a three month low, while Japan's Nikkei 225 has fallen 1.4% to a near three month low, also pressured by core inflation running above the BoJ's 2% target. In China, the CSI 300 and Shanghai Composite are down 0.6% and 1.3% respectively, with both indices at 15 month lows, although the Hang Seng has edged up 0.25%.

Oil remains a key macro driver. Prices jumped yesterday on reports that the US and Israel may launch renewed strikes against Iran after next month's US midterm elections. Brent rallied 4% yesterday and has extended its gains this morning to trade at a five month high.

Precious metals have come under heavy pressure, with gold slipping below $4,000 an ounce for the first time since July.

With Asian markets weaker and gold and PGM prices sitting at multi month lows, we expect a softer open for the JSE All Share Index, with precious metals miners likely to remain under pressure, while energy counters may find some support from elevated oil prices.

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 R16.50/$ | US 10yr 4.98% | Gold $4,014/oz | Platinum $1,571/oz | Brent Crude $114.40