Super Retail Group profit bounces on Macpac acquisition

Written on the 21 August 2018 by David Simmons

Super Retail Group profit bounces on Macpac acquisition

The acquisition of outdoor equipment specialist Macpac has buoyed Super Retail Group (ASX: SUL) at the full year.

During FY18, net profits rose 7 per cent to $145.3 million while earnings increased by 6 per cent to hit $219.6 million.

Though all of SRG's businesses performed well, it was the recent acquisition of Macpac for NZ$144 million (AU$130.3 million) that boosted SRG's results, according to Super Retail Group managing director and CEO Peter Birtles.

"The acquisition of Macpac completed with an effective date of 31 March 2018 and it performed strongly over the subsequent three months, contributing $7.8 million EBIT," says Birtles.

"We have closed six Rays stores and will be converting the remaining nine Rays stores to Macpac large format stores in the fourth quarter of the coming financial year. This will eliminate the losses contributed by the Rays business over recent years."

The year was also a period of consolidation as Rebel and Amart Sports merged into a single business, plus the combination of Macpac and Rays creating one outdoor specialist store.

"As anticipated, this significant change had some impact on sales and margin performance over the following six months as the Sports Division consolidated the product range across all stores and relaunched the former Amart Sports stores under the Rebel brand," says Birtles.

"Pleasingly customer net promoter scores have improved through the transition and sales momentum rebounded strongly in the final quarter."

In the group's auto retailing sector, under the Supercheap Auto brand, total sales grew by 5.3 per cent to $1 billion. Importantly, online sales for Supercheap Auto grew by 85 per cent.

Five new Supercheap Auto stores were opened and two were closed, resulting in the business having a footprint of 319 stores.

In addition to its large format Macpac and Rays merger, SRG also operates BCF in its outdoor range. The BCF brand contributed 11.9 per cent less of earnings compared to FY17, which the company says is due to competitors increasing their store footprint and pricing intensity.

SRG has announced a full year dividend of 49 cents per share, up by 5.4 per cent on the prior corresponding period.

Shares in SRG are up by 10.4 per cent to $10.1 per share at 11.10am AEST.

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Business News Australia

Author: David Simmons





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