$1 BILLION MILESTONE FOR SUPER RETAIL

Written on the 19 August 2011

$1 BILLION MILESTONE FOR SUPER RETAIL

SUPER Retail Group (ASX:SUL) has surpassed $1 billion in annual sales, today also announcing a 46.1 per cent net profit increase to $55.6 million.

The Brisbane retail giant also increased total sales by 16.4 per cent to $1092 million, bucking a retail slump.

Cash flow from operations was $18.3 million higher than the prior period at $70.9 million, reflecting stronger control of working capital and inventory management.

“New stores, solid like for like sales growth and a strong improvement in gross margins are the major drivers of these results,” stated managing director Peter Birtles (pictured) to the ASX.

“They have been delivered through a continued focus on new product introduction, sourcing and supply chain initiatives and the further development of business capabilities.

“These results have been achieved through a combination of the continued strong performance of the Supercheap Auto and BCF Boating Camping Fishing businesses and the full year contribution of Ray’s Outdoors.”

Supercheap Auto and Goldcross Cycles comprise Super Retail Group’s ‘auto and cycle retailing’, which recorded divisional sales of $708.2 million.

While Supercheap is going from strength to strength, recording $63.6 million EBIT (32 per cent up), Goldcross continues to be the group’s only poor performer with a 14 per cent revenue decline.

The SUL board has completed a review of the disappointing cycle chain and, as it only comprises 2 per cent of total group revenue, will likely persist with various operational strategies to turn the business around.

It highlights e-commerce competitors as a major challenge for Goldcross, with research indicating 16 per cent of cycling-related sales are made online.

The group’s leisure retailing division, comprising BCF Boating Camping Fishing and Ray’s Outdoors, recorded the biggest growth across the company with sales and EBIT both up 50 per cent to $384.1 million and $32.0 million respectively.

Birtles expects the company will continues delivering strong increases in revenue and profitability during periods of high and low spending growth.

“Although wider economic conditions mean that the short term outlook for retail spending remains uncertain, we are confident of our ability to grow our store network, deliver like for like sales growth and improve gross margins,” he says.

“We also expect to continue to deliver working capital efficiencies across the Group. In the current year, we plan to open five new stores, convert two stores to Superstores and refurbish another 30 stores in our Supercheap Auto business and to open 20 to 25 stores across the leisure retailing division.

“We have made a solid start to the new financial year with like for like sales growth in the first six weeks of around 5% in the Supercheap Auto and BCF Boating Camping Fishing businesses.”

The record revenue and profits figures were filtered down to shareholder returns, with SUL issuing an annual 29 cents per share dividend; an increase of 35 per cent (7.5 cents per share) over the prior year.

SUL stock remains unchanged at $6.32 per share.


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