INTERNAL ISSUES CRUEL SUPER RETAIL HALF YEAR RESULTS
Written on the 17 January 2014
INVESTORS have dumped Super Retail Group (ASX:SUL) shares this morning after the retailer reported half-year sales figures below expectation.
Impacted by a number of internal issues and a slowdown in the minding industry in the 26 weeks to December, CEO and group managing director Peter Birtles says the performance is not up to scratch.
Total sales of $1.096 billion is a 6 per cent increase on the prior corresponding period and like-for-like sales increased in each of the group’s three divisions, but SUL faced a number of short-term challenges and execution was not up to the standard Birtles expects.
The implementation of a new IT system did not run smoothly and particularly hampered the sports division, while new stores in the leisure division cannibalised existing business and a changeover in tool range impacted supply to the auto division.
Investors aren’t happy with the news and the SUL share price has dropped 16.07 per cent this morning to $10.55 per unit, even though Birtles says the issues are short term and have been resolved.
“The implementation of new IT systems in October and November impacted all businesses, most notably the sports division,” he says.
“These IT systems issues have now been resolved. We also experienced supply issues in our auto division due to a range changeover in the tools category.”
The impacts of the mining slowdown and cannibalisation from new stores on like for like sales performance in leisure division have been higher than expected for the company.
“Increased promotional activity to drive sales performance impacted gross margin but did not achieve the projected sales uplift.
“These are predominantly internal issues and we are confident these have now been addressed. We have implemented a number of initiatives to underpin gross margin performance across all three divisions in the second half.”
In the past six months the auto division opened four stores and closed two stores, while Leisure opened 10 stores and closed one, while the sports division opened nine stores and closed the remaining seven Goldcross Cycles stores.
The Sports Division also acquired 21 Workout World stores in late November.
Like for like sales were up 2.3 per cent in the auto division, 1.6 per cent in leisure and 5.5 per cent in sports.