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SUL

Super Retail Group Report Margin Squeeze As Sales Slow

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Super Retail Group (ASX: SUL) is a company that operates retail brands in the markets of auto accessories, outdoor equipment, sporting goods and apparel under the business names of Supercheap Auto, Rebel, BCF and Macpac. This morning (22nd October 2019) the firm released an October sales update ahead of their 2019 annual general meeting, SUL reported concerns surrounding sales margins as the Company balances promotional schemes with profit-generating margins.

SuperRetail Group - report
Source  https://www.superretailcommercial.com.au/about-us

 

What are the key points of the October sales update?

Super Retail Group sales results for the first 16 weeks of FY2020 are detailed below:

  • SuperCheap Auto total sales growth of 3.5%, like for like sales growth 2.7%
  • Rebel total sales growth 3.9%, like for like sales growth 3.1%
  • BCF total sales growth 6.7%, like for like sales growth 6.5%
  • Macpac total sales growth 3.2%, like for like sales growth down 1%

What are the drivers behind this result?

Super Retail Group announced that the decline in like for like sale growth in the Macpac segment was a result of refinement in Super Retail Group’s promotional and pricing strategy as the Company aims at establishing the right balance between sales and margin. The Company has stated they remain confident sales will grow as the year continues and that the Christmas period will have a significant impact on half-year results for SUL.

How have investors responded?

The market has responded negatively to the result with investors expecting stronger performance from SUL’s Macpac sector that was introduced in 2017 and produced 7.3% like for like sales growth and 70.3% total sales growth in FY19. Super Retail Group also provided results for the first six weeks of FY20 in their FY19 results, these estimated that like for like sales in the first six weeks of 2020 for Macpac were at 3%, therefore the reported 2.1% decline represents a 5% decline since July 2019. Accordingly, the share price has fallen 9.4% today to a price of $8.66.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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