Super Retail shares are down by close to 6 per cent after the automotive goods retailer posted a trading update that flagged higher costs across numerous areas in the business.
“Offshore freight costs have returned to pre-pandemic levels however inflationary pressures on wages, rent and energy expenses will impact Group CODB in the second half,” the update reads.
The Group, which includes Macpac, Rebel, BCF, and Super Cheap Auto, has opened 14 stores this financial year to date, but plans to open 13 more before the end of June might be at risk.
“Given delays in construction & development approvals, there is a risk that some store openings will slip into FY24,” the company said.
As of 1:30pm, shares have tumbled 5.95 per cent to $12.65, after falling as far as $12.44 upon the market opening – the update was posted after the close of trading yesterday.
Interestingly, the group’s actual financials look to be healthy for the current financial year-to-date.
Total sales for the group for the first 43 weeks of the financial year are up 10 per cent on the same period in FY22, with Supercheap Auto and Rebel both up 11 per cent for the financial year-to-date.
CEO Anthony Heraghty spoke at the Macquarie Australia conference today, where he pulled no punches.
The way we think about it, underlying demand for retail will be flat to negative,” he said.
“We are planning for the worst and hoping for the best.”
Group sales have grown steadily over the last decade, a trend to looks to continue for FY23.
“The macro environment remains challenging; however, the Group’s large active club member loyalty base and leading market positions in the resilient auto and sports categories mean it is well positioned to perform throughout the economic cycle,” the ASX update explained.
Heraghty echoed this sentiment at the conference, pointing out that suppliers and global partners have flagged that cost of goods would be coming down as the pressure eased.
“We are always of the view that the COVID bubble would end,” he said.
“We took a lot of steps in terms of store investment and in terms of our investment in digital to bolster the business when the bubble starts to decline.”
The company’s digital business continues to boom. Although it will post a drop compared to the height of the FY22 pandemic, it remains the same as it did in FY21, with click-and-collect purchases as prevalent as home deliveries, suggesting that the Group has the rare customer who will combine digital purchasing with in-store visits.
The overall business saw its strongest Easter to date, with Macpac in particular soaring during this period.
Supercheap Auto has seen consumer demand move to less discretionary items with auto maintenance and lubricants the strongest performing categories.
Rebel has achieved strong sales growth in football and basketball, with new regional stores in Ballina, Nowra, Tamworth and Bunbury seeing “highly encouraging” trade.
BCF mostly-flat sales “reflect a growing contribution from strategic brands,” with competitors indulging in aggressive markdowns and intense promotional campaigns.
“We are not getting into a discounting cycle because we are selling something that is stylish but functional,” Heragthy noted.
“We are seeing some movement from wants to needs, but we are not seeing any material disengagement in activity.”
The group’s inventory is also beginning to normalise after the COVID stockpiling, something the company has managed to do without incurring lower profit margins.
The company announced an investor day on May 17, where it will discuss its plans in further detail, including the possibility of capital management.
