Super Retail raising $203m
Super Retail Group is raising $203m through an entitlement offer, with Macquarie Capital and UBS on the ticket.
Shares are being sold at $7.19 each, a 7.9 per cent discount to their last traded price on June 12.
The raise represents 14.3 per cent of shares on issue.
A term sheet sent to investors says entities controlled by Reg Rowe have expressed their support for the equity raising and have committed to take up their full entitlement, representing a subscription of $59.2m new shares in the equity raising, and remain committed to their shareholding for the long term.
The use of the proceeds for the company that owns retail brands such as Macpac and Rebel and Supercheap Auto are to enable the group to continue to execute its strategy and continue to pursue strategic growth initiatives.
They will also allow Super Retail to position the business to take advantage of changing consumer trends by returning capital spending to historic levels of about $90m per annum, even if a softer trading environment emerges.
Super Retail Group, whose retail chains include Supercheap Auto, BCF and Rebel Sport, has witnessed a whiplash shift in its sales through the coronavirus pandemic. Its like for like sales plunged 26.2 per cent in April but then rebound in May to grow by 26.5 per cent.
Super Retail added that gross margin percentage over April–May was down, impacted by a shift in product mix towards higher value / lower margin products and higher proportion of online sales.
However, cost mitigation measures have partially offset the gross margin impact.
It said May year to date gross margin percentage is 20 basis points below the first half. May to date normalised operating costs as a percentage of sales are broadly in-line with the first half.
There was minimal disruption to Super Retail Group’s supply chain, with the exception of some domestic freight capacity for both in-bound and on-line delivery.
As a result of the strong May trading and measures undertaken to reduce inventory holdings, inventory levels at May 20203 reduced by $65m. Temporary extension of key supplier terms impacted payables.
Super Retail said total capital expenditures incurred May financial year to date were $61m. Pre-tax abnormal items totaling $18m were recognised as part of the first half result. A
further estimated $40m of pre-tax abnormal costs is expected in fiscal 2020.
However the impact of the health crisis as well as the economic shock flowing from restrictions on movements and home isolation will see Super Retail book abnormal costs of $40 million in the second half.
“The equity raising enables us to continue the execution of our strategy, further strengthen our omni-retail capabilities and continue to organically grow our four core brands,” Super retail CEO Anthony Hegarty said in a statement.
In its trading update, the company said Supercheap Auto like for like sales for the financial year to May were up 3.3 per cent, Rebel up 2.5 per cent, BCF sales down 2.5 per cent and Macpac down 12.5 per cent. Total like for like sales for the financial year to May were up 1.2 per cent.
During April and May, there was a strong shift to on-line with Group on-line sales increasing 126.2 per cent to represent 18.2 per cent of group sales over the same period.
Super Retail added that gross margin percentage over April–May was down, impacted by a shift in product mix towards higher value / lower margin products and higher proportion of on- line sales.
However, cost mitigation measures have partially offset the gross margin impact.
It said May year to date gross margin percentage is 20 basis points below the first half. May to date normalised operating costs as a percentage of sales are broadly in-line with the first half.
There was minimal disruption to Super Retail Group’s supply chain, with the exception of some domestic freight capacity for both in-bound and on-line delivery.
As a result of the strong May trading and measures undertaken to reduce inventory holdings, inventory levels at May 20203 reduced by $65m. Temporary extension of key supplier terms impacted payables.
Super Retail said total capital expenditures incurred May financial year to date were $61m. Pre-tax abnormal items totaling $18m were recognised as part of the first half result. A
further estimated $40m of pre-tax abnormal costs is expected in fiscal 2020.
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