Supercheap Auto, Rebel owner Super Retail hits record close

Autoparts and sports apparel seller Super Retail enjoyed a stellar trading day despite a mixed first-half performance that pulled in record sales but missed analyst expectations.

Super Retail Group’s strong first-half sales performance across its 700-plus stores is seeing investors pile into the owner of the Supercheap Auto, Rebel, BCF and Macpac brands.

Shares hit a new high of $16.99 in intraday trading before trimming gains to record a record close up 5.7 per cent at $16.71.

In its trading update on Monday, Super Retail Group reported preliminary first-half revenue to December 30 will come in around $2bn and profit before taxes between $200m and $203m after record sales.

The group “traded well” over the cyber sales and Christmas holiday trading period and maintained positive like-for-like sales growth in the first half.

But cost of living pressures on the consumer did lead to a more constrained retail trading environment at the end of the second quarter.

The mixed update shows overall group sales were up 3 per cent on the prior corresponding period and like for like sales up 1 per cent.

Sales at BCF jumped 8 per cent with revenues at $484m. Supercheap – the largest contributor to earnings – saw sales rise 4 per cent and reported revenue of $760m, while Rebel pulled in $673m, but its sales dipped 1 per cent. Macpac revenue totalled $105m with sales increasing by 4 per cent.

The result is a miss on Bloomberg’s consensus estimates for $2.03bn in revenues.

Group chief executive Anthony Heraghty said the group traded well over the cyber sales and Christmas holiday trading period.

Retail Super’s customer proposition and the resilience of the lifestyle and leisure categories underpinned its performance in challenging economic conditions “where consumers are sharpening their focus on value”, he said.

“Well-executed promotions during peak end-of-year trade have delivered revenue growth that has translated into strong first half earnings,” he said.

But cost pressures are growing.

“While gross margin in the first half is expected to be higher than the previous corresponding period, Super Retail’s cost of doing business (CODB) as a percentage of sales has increased as a result of the impact of inflation on wages, rent and electricity,” he said.

This is being especially felt within its Rebel brand given the composition of its lease portfolio and its higher team member-to-store ratio.

At Rebel, its loyalty push through a new program in October, which saw 40 per cent of its 3.9 million active club members earning points, has resulted in a $5m provision for those credits in the first half and $8m for FY24, as flagged previously.

Super Retail, which has 15,000 employees has no drawn bank debt and is likely to close the first half with a positive cash balance.

Audited first half results are due on February 22.