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A bumper Black Friday and Christmas sales period has helped push Super Retail Group’s (ASX: SUL) revenue past $2 billion for the first half of FY24 with unaudited figures revealing the company is heading for a record pre-tax interim profit.
Despite a slide in revenue from its Rebel sports chain, Super Retail is targeting profit before tax of between $200 million and $203 million for the six months to the end of December, driven by revenue gains from the BCF, Super Cheap Auto and Macpac operations.
BCF’s sales recorded the biggest increase with sales up 8 per cent, while Super Cheap and Macpac both lifted revenue by 4 per cent, with each of these results aided by new store openings.
However, the Super Cheap and BCF businesses clearly delivered the most robust performances as like-for-like sales were up 3 per cent and 2 per cent respectively, while outdoor lifestyle retailer Macpac recorded flat like-for-like growth during the period.
In comparison, Rebel’s like-for-like sales fell 3 per cent while total sales slipped 1 per cent.
Rising business costs across the group have compounded the weaker Rebel result with the sporting goods division among the hardest hit.
CEO Anthony Heraghty reveals that Super Retail Group traded well over the cyber sales and Christmas holiday trading period, but he notes that consumer spending has started to tighten.
“We maintained positive like-for-like sales growth in the first half, however cost of living pressures on the consumer did lead to a more constrained retail trading environment at the end of the second quarter,” Heraghty says.
“Despite this, our customer proposition and the resilience of the lifestyle and leisure categories in which we operate underpin our performance in challenging economic conditions where consumers are sharpening their focus on value.
“Well-executed promotions during peak end-of-year trade have delivered revenue growth that has translated into strong first half earnings.”
Super Cheap Auto remains the engine room of profitability for the group with $760 million in revenue expected to deliver pre-tax profit of between $106 million and $107 million.
Rebel is expected to contribute profit of up to $65 million from $673 million in sales, while BCF earnings are expected to be up to $41 million from $484 million in sales.
Macpac is targeting an $8 million pre-tax profit from sales of $105 million.
Heraghty says while there has been an improvement in gross margins in the latest half year, compared to the previous corresponding period, the cost of doing business (CODB) as a percentage of sales has increased across the group due to higher wages, rents and power costs.
“Higher CODB has impacted Rebel in particular, given the composition of its lease portfolio and its higher team member-to-store ratio,” he says.
“Following the successful launch of Rebel’s new customer loyalty program in October 2023, more than 40 per cent of Rebel’s 3.9 million active club members have already earned points by shopping at Rebel.
“Rebel’s first-half normalised PBT result includes the impact of a provision for deferred revenue as a result of loyalty credits issued to customers under this program.”
Super Retail estimates this provision to be about $5 million in the December half and to total about $8 million for the FY24 full year.
The latest earnings update sent Super Retail shares 6 per cent higher to $16.75 in early trading today. The shares were changing hands for $16.64 at 10.25am (AEDT).
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