EEMEA Food Retailers: SA grocer update: what food inflation?

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EEMEA Food Retailers: SA grocer update: what food inflation?

6 and on our Emerging EMEA

Exhibit 1: Change in Price Objectives1 list of top ideas. Investors seem more focused on what parent Pick n Pay will do with We lower our PO’s in-line with our updated

its remaining 53% stake. Near-term we think further sell-downs are unlikely as PIK has EPS forecasts. Valuation methodologies are

sufficient liquidity through to FY29E. We trim estimates by c1.2% but still see a 3Y EPS unchanged.

CAGR of 14% and potential upside* of c19% and, scope for higher dividend payouts.

PO PO CompanyShoprite (Buy): continues to gain share in a slow growing grocery market. Debates Rating (new) (old)

include cannibalisation and economics of new stores given >7% space growth. Sixty60 Boxer Buy 98 100

remains a tailwind and may soon become the #1 online platform in SA, on revenue. We Shoprite Buy 324 328

Spar Buy 73 78

trim estimates by 1.2% but still see 3Y EPS CAGR of 11.4% & potential upside of c14%. Pick n Pay U/perform 17.0 18.3

Spar (Buy): investors are unconvinced of the turnaround and await evidence that Woolworths Neutral 54 59

initiatives underway will lift margins. At a P/E of 5.5x, we think the share is discounting Source: BofA Global Research estimates

no improvement. Debates include franchisee health and adaptability of the model to BofA GLOBAL RESEARCH

online. We think FY26E is likely the trough for EPS and see 47% potential upside.

Woolworths (Neutral): Food remains highly regarded but we take a more cautious view Key abbreviations

on CRG on a persistently tough consumer backdrop in Australia and sticky opex inflation CRG: Country Road Group

(minimum wage hike +4.75% vs +3.5% in ‘25). Lower red-meat inflation could also CY: calendar year

weigh.