Boxer has delivered market-pleasing results with headline earnings up 5.3% y-y and strong turnover growth of 13.9% y-y in 1H26. Top-line growth was mainly driven by aggressive store rollouts, with space growth rising 9.7% y-y. Despite rapid space expansion, management may still miss their target of 60 new stores, with 57 net new stores this year. We think the failure to achieve the target could highlight the difficulties in finding suitable sites, especially for superstores, which could come in six short of management’s target of 25 new stores this year.
Boxer’s GPM was flat as management reinvested in price. However, its competitors SHP and WHL Food have reported some margin uplift, despite also pursuing price investment strategies. The lack of GPM improvement indicates the higher price sensitivity of BOX’s customer base, which could limit its longer-term margin enhancement opportunities, in our view.
Although trading expenses growth of 12.6% y-y (excluding listed entity-related costs) appears reasonable, it was distorted by load-shedding costs in the prior year. We calculate that normalised expense growth in 1H26, adjusted for load-shedding and listed-entity costs, was high at 17.5% y-y. With no such distortion in 2H26, we think expense growth in the period ahead could be higher, which, coupled with the lack of GPM enhancement, could weigh on the company’s trading margin.
Our analysis of the liquidity of SA retail shares shows that Boxer has the second-lowest free float in the sector, while the volume traded relative to its shares in issue is also relatively low. This limited liquidity may make shorting the stock difficult and could amplify any interest in the shares, in our view.