Super Retail, which owns Rebel and Supercheap Auto, warns on profit margin pain, cost blowout

Super Retail, which has racked up headlines for an alleged illicit affair between its CEO and a former executive, has warned shareholders of weaker margins and a cost blow out.

Super Retail Group CEO Anthony Heraghty in a Rebel store. Picture: Jane Dempster/The Australian.

Super Retail Group, which has been embroiled in bullying claims, allegations of an illicit relationship between its chief executive and former head of HR and a wage theft scandal, has warned shareholders its profit margin is under pressure.

Retail trading remained subdued and heavy discounting in some categories was pinching profitability, it told investors in an aftermarket statement to the ASX on Wednesday.

The weaker earnings outlook, driven by a range of factors from tougher conditions in auto parts to adverse weather heading into winter generating a slower seasonal transition at its Rebel Sport chain, has also been accompanied by a ratcheting up of costs around the replacement of an ageing payroll system.

The company, which owns chains Supercheap Auto, Rebel, BCF and Macpac, is set to present to the Macquarie Australia Conference on Thursday. It will disclose that group gross margin for the second half to date was tracking below the same time last year. It said this weaker gross margin was “broadly consistent” with year-on-year declines also witnessed in the first half.

This being so, group like-for-like sales since January had risen 3.1 per cent, an improvement on the 1.8 per cent growth for the first half, but retail conditions remained subdued, particularly for its stores in New Zealand.

Anthony Heraghty’s alleged affair with a former exec has been aired in court documents by whistleblowers. Picture: Jane Dempster/The Australian

Elsewhere in the trading update, Super Retail said sales for its Supercheap Auto arm had dipped into the negative, falling 0.1 per cent for the second half, as promotional intensity continued to dominate the auto category.

At Rebel, sales rose 3.5 per cent for the second half year to date as it experienced an acceleration in growth despite absorbing a $5m net sales headwind associated with the impact of cyclone Alfred. Footwear continued to perform well, it said, alongside positive contributions from equipment categories. But while apparel performed well in the third quarter, milder conditions into winter have resulted in a slower seasonal transition during April.

At BCF, which specialises in boating, camping and fishing products, sales rose 9.1 per cent for the second half as sales in the third quarter benefited from a strategic investment in stock availability, followed by a solid Easter trading period.

Camping equipment retailer Macpac suffered a 0.1 per cent sales decline since January.

Adding to its woes, which in recent years has seen its CEO Anthony Heraghty accused in court documents by whistleblowers of having an affair with the company’s former head of HR Jane Kelly, was also a warning of higher costs. (The workplace matter is headed to court and Super Retail is yet to lodge its defence).

The retailer is faced with the costly replacement of its payroll system, building a new HR management platform as well as the bill related to the transition to its new Victorian distribution centre. Those forces combined forced Super Retail to update investors on a swelling of unallocated costs for 2025 and 2026.

The company warned these would be $42m for this financial year, compared to $36m in 2024. Together, duplicated operating expenses for the Victorian distribution centre and the new payroll and HR systems would total $29m in 2026.

Previously, Super Retail admitted to underpaying its staff which ultimately amounted to more than $60m in payments and a current court case in the Federal Court launched by the Fair Work Ombudsman.

Originally published as Super Retail, which owns Rebel and Supercheap Auto, warns on profit margin pain, cost blowout