Super Retail set for 200pc profit boost, will repay JobKeeper

Owner of Supercheap Auto and Rebel retail chains to repay pandemic wage subsidies as it forecasts a surge in first half profit.

A Superchedap Auto store. Picture: AAP

Super Retail Group has pledged to repay the JobKeeper payments it received during the first half of the financial year after flagging a 200 per cent rise in net profit for the period.

In a statement to the ASX the group, which operates brands such as Supercheap Auto, Rebel and Macpac, said it expects earnings before interest and tax for the 26 weeks to Boxing Day of between $174m and $177m, a result up 139 per cent on the prior year.

Group sales lifted 23 per cent to $1.77bn while sales on a like-for-like basis grew by 24 per cent.

Based on this performance Super Retail Group expects to hand down a statutory net profit after tax of between $174m and $177m, a potential increase of 200 per cent on the $57.5m profit in the same period in 2019.

As a result, the group said it intended to return the $1.7m in JobKeeper support it received during the 26 weeks, as the federal government moved to help businesses hit by the pandemic.

Despite the strong update, market reaction was muted with shares in the company dropping 1.02 per cent in early trade to $11.63, before lifting slightly to near its opening price at $11.72.

Group CEO Anthony Heraghty said a strong Christmas trading period and Cyber weekend in November underpinned the results and had boosted online sales.

“The successful execution of the group’s omni-retail business strategy and the effectiveness of our supply chain and inventory management have been instrumental in fulfilling large volumes of customer orders and delivering a strong result for the first 26 weeks of trading,” Mr Heraghty said.

“The operating leverage which the group has been able to achieve during a period of robust online sales growth clearly reinforces the profitability of our digital sales and, in particular, the scalability of our omni-retail platform.”

Online sales jumped 87 per cent to $237m, representing 13 per cent of the group total.

Click and collect sales lifted by 74 per cent to $108m, comprising almost half of online group sales, while gross margin expanded by 270 basis points.

Analysts at Goldman Sachs said Super Retail Group had positioned itself “extremely well,” and will continue to catch the continuing boom in domestic consumption as international travel remains a non-possibility.

“As we have noted before, while much of the consumer spending patterns seen over 2020 are unlikely to be sustained, the international travel restrictions associated with the pandemic are expected to provide a medium-term tailwind,” the analysts said on Monday.

Mr Heraghty said that the group would reinvest in its flagship brands with an eye to expansion.

“Strong cashflow generation leaves us well placed in the second half to reinvest in our brands to maintain our customer value proposition, expand and reward our customer base, consolidate our market-leading positions and grow our market share,” he said.

“As inventory levels are restored during the second half, following a period of unprecedented consumer demand, we expect the level of promotional activity to increase.

“While we remain cautious on the outlook for the second half given the uncertain economic environment, the group has a resilient business model, underpinned by powerful brands with market-leading positions in growing lifestyle categories, an active customer base of 7.1 million loyalty club members and a conservative balance sheet with a strong cash balance and no net bank debt.”

Super Retail hands down its half year result on February 17.