Rédaction Africa Links 24 with The Finance Ghost
Published on 2024-02-25 20:18:35
Pick n Pay is considering listing Boxer separately to address the challenges faced by its core supermarket business. This move is similar to what Transaction Capital did with WeBuyCars, unbundling it to save the mother ship. By listing Boxer separately and retaining a controlling stake, Pick n Pay aims to sell a significant minority stake in Boxer to raise capital and revitalize its core business.
The latest sales figures show a stark contrast between the growth of Boxer at 17.1% and the decline of Pick n Pay’s core business by 0.1%. With the Clothing division showing strong growth at 17.5%, it is evident that the supermarket business is struggling. The increase in net debt from R3.8 billion to R7.2 billion highlights the urgent need for action to address the financial situation.
Despite the challenges, Pick n Pay is considered too big to fail due to various factors such as unemployment and potential impacts on lenders. Lenders have temporarily waived the covenants to the debt facilities, but a potential rights offer of up to R4 billion has been signaled to alleviate the financial strain. However, the real solution to the balance sheet issues is expected to come from the IPO of Boxer.
Comparing Pick n Pay to Spar, the latter has shown better performance with a growth of 6.1% in core grocery and liquor turnover. Spar faced challenges with an SAP implementation in KZN but still outperformed Pick n Pay. While the building materials sector struggled, Tops at Spar recorded a sales increase of 12.7%. Spar’s offshore businesses also experienced growth due to the weak rand.
Bidcorp presents a contrasting story with strong revenue and trading profit growth. The global food services giant offers a good rand hedge on the local market, with a significant portion of its revenue generated outside of South Africa. Despite margin pressure in the UK business, Bidcorp’s performance highlights resilience in the face of consumer challenges.
In conclusion, Pick n Pay’s decision to list Boxer separately reflects a strategic move to address its financial challenges and revitalize its core business. While facing tough competition and financial strains, the company is exploring options to regain stability and growth. Comparisons with Spar and Bidcorp offer insights into the competitive landscape and potential opportunities for growth and improvement in the retail sector.
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