Today’s edition
Boxing Clever
Presented by
Good morning, it’s Monday the 26th of October. Pick n Pay’s share price has jumped, and it’s all because the struggling retailer has some surprisingly good news for investors. Also in today’s show, Shoprite could be teaming up with Investec to expand its banking services, SAA is struggling to pay its staff on time, and South African exporters are seeing a massive new opportunity in China. Let’s get into it.
MARKETS
BOXING CLEVER
Pick n Pay is about to report another loss, and it is a lot smaller than the last
Pick n Pay’s share price rose 4.6% on Friday, which is a lot of enthusiasm for a retailer that is still losing money. What got investors buying back in was Thursday’s trading statement: the loss per share for the six months to August should come in 40% to 50% smaller than a year ago.
Boxer, the discount chain Pick n Pay owns most of, has been the group’s crown jewel for years, but this time the supermarkets carrying the Pick n Pay name helped too - with what the group calls a moderately reduced trading loss. That is the bigger development, because Boxer doing well isn’t new.
Where the turnaround stands:
- Sean Summers came back as chief executive in 2023, and has been closing underperforming stores, cutting costs and trying to win shoppers back.
- Last year’s first-half loss, on the cleaned-up measure listed companies report, was only R439 million, so a modest improvement makes an impressive percentage.
- The supermarkets’ break-even target has been pushed back twice, now to 2029, and Pick n Pay has scrapped its retrenchment plans after reaching agreement with the union.
Investors seem to be buying into a turnaround that is very much a work in progress. The full results land at 7:05am this morning.
LICENCE TO TILL
Africa’s biggest grocer is reportedly talking to Investec about banking, without becoming a bank itself
Just last month, Shoprite’s chief executive Pieter Engelbrecht told Bloomberg the company had no intention of becoming a bank. “We are not bankers, we are retailers,” he said. On Friday, Bloomberg reported that Shoprite is in talks with Investec about a banking partnership anyway. Neither company has confirmed it, and there is no guarantee a deal will happen.
Shoprite already offers something that works a lot like a bank account. More than 4.3 million South Africans use its Money Market Account to deposit cash, send money and pay, with no monthly fee, and African Bank provides some of the banking behind it. A tie-up with Investec could take Shoprite into things like lending without becoming a bank itself: Shoprite brings the customers, the stores and the shopping data, and Investec brings the licence and the expertise.
So Shoprite could end up offering many of the services you’d expect from a bank, without ever having to become one.
BAGEL BITE
Who was the first Roman emperor?
A. Augustus
B. Julius Caesar
C. Nero
DOING THE ROUNDS
Clicks has released its annual financial results, and for the first time, the retailer has crossed R50 billion in sales. Its retail business performed well, with trading profits growing almost 10%. But its pharmaceutical distribution business, called UPD, struggled after losing two major contracts, with trading profits falling 10.4%. That dragged the group’s overall trading profit growth down to just 4.7%. And with Clicks expecting competitors to keep discounting, the pressure on the business isn’t going away anytime soon. Full story →
It’s been just over a year since French media giant Canal+ bought MultiChoice for around R55 billion, and its latest trading update shows that the business is still losing ground in South Africa. Falling DStv subscriptions have contributed to a 3% decline in MultiChoice’s revenue over the first nine months of the year. But there are some signs of improvement, with that decline slowing in the latest quarter. Canal+ has also started rolling out simpler DStv packages, offering customers more content for the same price in an effort to win them back. Full story →
South African Airways is struggling to pay its staff on time, and it’s now the second month in a row that salaries have been delayed. The airline says rising fuel costs and cash flow pressures are to blame, with employees being paid on different dates throughout the week. But Parliament is now demanding answers about SAA’s finances. Its appropriations committee has requested an urgent report by 30 October, including an explanation of what happened to the roughly R1.1 billion SAA received from selling a landing slot at London’s Heathrow Airport. Full story →
South African businesses are taking advantage of a massive new opportunity to sell their products to China. Since May, China has removed import duties on almost all South African goods, making it cheaper for Chinese buyers to import our products. And the response has been pretty impressive. Between June and August, customs declarations for exports jumped 199% compared to last year. But the arrangement only lasts until April 2028, so South African officials are now negotiating with China to try and make the zero tariffs permanent. Full story →
WEATHER
BAGEL GAMES
Have you got what it takes to win today’s Wordle? Play here →
THE ANSWER
As for the Bagel Bite, the answer is: A. Augustus
Augustus, born Gaius Octavius and commonly known as Octavian before becoming emperor, was Julius Caesar’s adopted son and heir. After years of civil war, he emerged as Rome’s dominant ruler. In 27 BC, the Senate granted him the title Augustus, a date traditionally used to mark the beginning of the Roman Empire. He ruled until AD 14, more than 40 years, and helped establish a period of relative peace and stability.
That’s your Monday covered. Enjoyed it? Forward it on, a friend can subscribe in a click. Written by the Business Bagel crew.