Super Retail Group Releases Trading Update for 1H FY2019

Australia’s Leading retailer, Super Retail Group Limited (ASX: SUL) has released a trading update for the first half of FY 2019. For the half-year period, the company has announced provisional Group Segment Earnings Before Interest and Tax of $124.5 million which is 9.6% higher than the previous corresponding period (pcp).

The company has reported total group sales of $1.4 billion in 1H 2019 which is 6% higher than pcp. The Group’s Segment Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) is $166.2 million in the first half of FY19, an increase of 11.3 percent on pcp. The company has reported an operating cash flow of $235.4 million, $69.2 million higher than Group Segment EBITDA.

In the Auto retailing division, the company’s Sales increased by 2.7% to $530.8 million, with like for like growth of 1.8 percent, driven by growth in average transaction value. According to the company, the sales growth was stronger in the Auto Maintenance and Accessories categories and in Queensland, Victoria, and New Zealand. The online sales of the company increased by 23% on pcp, and it represents 6% of total sales. During the half year, the Auto retailing division opened four new stores, resulting in 323 stores at period end.

The Outdoor Retailing Segment of the company generated $348.5 million in sales and $22.9 million in EBIT which were 16.5% and 39.6% higher than pcp respectively.

In the Sports Segment, the total sales increased by 4% to $523.9 million, with 3.2% like for like sales growth driven by transaction and unit growth. Digital sales in the Sports Segment increased by 41% on pcp and now it represents 11% of total sales. For the half-year period, the Operating cash flow was $235.4 million which was $69.2 million higher than Group Segment EBITDA, demonstrating the Group’s continued strong cash conversion.

The Effective management of networking capital has enabled the company to fully fund an increase in inventory levels to support higher in-stock availability and to offset the impact of the lower Australian dollar on inventory costs. During the half year period, the like for like sales growth was around 4% in Supercheap Auto over the first six weeks of the second half.

According to Super Retail Group Managing Director and Chief Executive Officer, Mr. Peter Birtle, all three Group segments generated an increase in EBIT, driven by solid sales growth, a focus on maximizing cash gross profit and controlling operating costs.

SUL’s share traded at $7.840 with a market capitalization of ~$1.55 billion. The counter opened the day at $8.400, reached a day’s high of $8.540 & touched a day’s low of $7.720 with a daily volume of ~2,677,735. Meanwhile, the stock has generated a negative YTD return of 15.08% but posted a negative return of 7.64% in the last six months (as of February 11, 2019). It had a 52-week high price of $10.440 and 52 weeks low of $6.350, with an average volume of ~828,225.

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