Super Retail Group books record sales in the first half, helped by a strong Christmas

Super Retail Group – the operator of Supercheap Auto, BCF, Rebel and Macpac chains – says it expects revenues in the six months to December 31 to hit $1.96bn.

Super Retail Group – the operator of Supercheap Auto, BCF, Rebel and Macpac chains – says it expects revenues in the six months to December 31 to hit $1.96bn as the company unveiled strong sales in the first half of the financial year.

The company became the first major retailer to update the market on the crucial Christmas trading period, reporting normalised profits for the 6 months would be between $212m and $218m – some 20 per cent above expectation.

This was against sales of $1.7bn and normalised profit of 112.8m for the same period last year.

“The consumer is solid, I don’t think it is getting materially better, but I don‘t necessarily think it’s getting worse,” Super Retail chief executive Anthony Heraghty told The Australian.

“We still have got a consumer that has spent the last two to three years in adverse circumstances that are looking to live a little through some of our categories, like Rebel, Macpac and BCF, but you are not seeing an out of control customer either, it is solid.

“All four core brands traded strongly over the peak cyber sales and Christmas holiday trading period as customers embraced the festive season, contributing to a record first half sales performance.”

Super Retail shares jumped 7.7 per cent, or 88c, to close at $12.34. They are up 1 per cent in the last 12 months, giving the group a market capitalisation of $2.8bn.

The company will release its first-half results on February 16.

The trading update showed comparable first-half sales at its car maintenance and accessories retail business Supercheap Auto rose 15 per cent, Rebel sales were up 11 per cent, BCF fell 2 per cent and Macpac was up 54 per cent.

However, BCF, which specialises in boating, camping and fishing goods reported total sales for the half up 7 per cent. “BCF was off a year where everybody was camping at home, so for BCF to be holding sales last year where no one could travel anywhere is pretty good,” Mr Heraghty said.

Investment bank analysts have been split on the outlook for retail, with UBS last week releasing the findings of a study which concluded that consumers are in a far stronger position than expected, drawing down on savings to fuel spending through the holidays.

UBS analysts said the data showed consumers were bullish in the final three months of 2022, and expected strong spending growth over the next 12 months.

Macquarie, on the other hand, said that while shoppers were still willing to spend over Christmas – despite the impact of higher inflation and interest rates – it was likely that sentiment would sour in the coming months.

Super Retail has been one stock that has come as brokers looked at the sector for good buying opportunities, emerging – with Beacon Lighting and Universal Store – as the top pick for Morgans’ Alexander Mees in late December. “Super Retail has more than $250m in franking credits and we wouldn’t be surprised to see a special dividend at some point,” he wrote.

Its Supercheap Auto chain delivered the majority of sales in the first half, some $728m, followed by Rebel ($682m), BCF ($447m) and Macpac ($101m). A shifting calendar meant Boxing Day fell in the second half of the company’s 2022 financial year but in the first half of the 2023 financial year. Boxing Day contributed some $27m of sales and $7m of pre-tax profit in the last financial year.

Mr Heraghty said Supercheap Auto could clock sales growth of 5 per cent and report like-for-like sales growth of 15 per cent.

“Supercheap has been a pretty consistent business for a long time and for it to be having a 15 per cent comparative sales growth in a clean period (without Covid-19 pandemic disruptions) is more than just a step up in consumer demand, there is a bit of market share growth in there,” he said. “And I think our executions improved in that business out of sight.

The group’s inventory at the end of the December half was approximately $30m lower than at the end of the first half of 2022. Mr Heraghty said Rebel had a much improved stock position as this time last year it struggled to secure products from global brands.

“The group’s inventory balance is expected to continue to normalise during the second half as purchase orders are adjusted to reflect current stock levels,” he said.

“The group had no drawn bank debt and a positive cash position at the end of the first half.”