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The retail sector brings so much on to table for Australian economy that it is hard for investors not to keep a close eye on the retail players. Due to the ongoing drought and devastating bushfires in Australia which has severely impacted the operations of various retailers all around the country, investors’ interest in the performances of retail players has further increased.
Super Retail Group Limited (ASX: SUL)
Super Retail Group Limited recently released its results for the first half of FY20. Over the period, the company delivered total sales of $1.44 billion and like-for-like sales growth of 1.7%, despite the impact of bushfires and drought on the peak trading period. The company witnessed solid top line growth for both Supercheap Auto (3.7%) and Rebel (3.6%) which together contributed 89% of brand EBIT. Notably, the company achieved strong gross margin momentum in the second quarter.
While announcing the results, the company’s Chief Executive Officer and Group Managing Director, Mr Anthony Heraghty highlighted that the company’s online sales, which represent more than 8% of total sales, have increased by 22% and click and collect is growing faster than home delivery. He further added that more than 96% of Group sales involve a customer coming into store, which means that the company can leverage the scale and convenience of its national store network to grow sales while minimising its cost to serve.
With regards to the impact of Coronavirus (COVID-19), the company has assured that there is no expectation of a material impact on availability of product in the short term given current inventory levels, however the company will continue to monitor ongoing developments in China and undertake appropriate contingency planning.
In the last one-year, SUL provided a return of 16.05% in the last one year. By AEDT 3:12 PM, SUL stock was trading at a price of $9.470, up by 3.9% intraday, with a market cap of $1.8 billion.
Coles Group (ASX: COL)
Coles Group has reported a sales growth of 3.3% in the first half of FY20. The company witnessed satisfactory sales revenue growth across all segments and continued profit growth in Supermarkets. During the period, Coles’ Earnings before interest and tax (EBIT) increased by 0.4%, partially due to strong property disposal demand.
Notably, Coles online achieved sales revenue growth of 24% on the prior corresponding period, driven by the roll out of an additional 142 Click & Collect locations and Home Delivery supermarkets, and the launch of ‘Delivery Plus’, the new subscription program to drive customer loyalty.
With regards to the outlook for the remainder of FY20, the company has advised that the incremental costs associated with the removal of plastic bags and increased flybuys promotions which were a benefit to Supermarkets EBIT growth in the first half of FY20 will not occur in the second half of FY20. Further, the Corporate costs are expected to be broadly in line with the $66 million annualised costs noted in the Demerger Scheme Booklet, offset by the $15 million provision release in workers compensation due to an improved safety performance.
In the past six months, COL’s stock price increased by 22.55%. By AEDT 3:12 PM, COL was trading at $16.170 with a market cap of $21.4 billion.
Wesfarmers Limited (ASX: WES)
Australia’s leading retailer, Wesfarmers Limited recently entered into an underwriting agreement with two lead managers to sell 4.9% of the issued capital of Coles Group with an intent to retain a minority interest of 10.1% in Coles and its right to nominate a director on the Coles Board, maintaining the ongoing relationship between the two companies since the demerger of Coles from Wesfarmers in November 2018.
At the time of the demerger of Coles, Wesfarmers had retained the right to nominate a director to the Coles Board while it retains an interest in Coles of at least 10%, the partial sale of the Coles shareholding would crystallise a strong return for shareholders and will result in mutual benefits.
In the first half of FY20, the company reported revenue $15,249 million and EBIT of $1,734 million, with results underpinned by strong performance of the Group’s largest businesses, Bunnings and Kmart, and ongoing solid performance in WesCEF.
In the past six months, WES stock provided a return of 18.3% to its shareholders. By AEDT 3:12 PM, the company’s stock was trading at a market price of $47.120 with a market cap of $52.78 billion.
Lovisa Holdings Limited (ASX: LOV)
Fashion jewellery retailer, Lovisa Holdings Limited witnessed an increase of 22.2% in its revenue to $162.8 million for 1H FY2020, driven by the net opening of 42 new company owned stores and 7 new franchise stores over the period. The gross profit for the half was $128.5 million, an increase of $20.6 million on the prior half. Gross margin for the half was 79% compared to 81% for the first half of the prior year.
For the half year, the company intends to pay an interim dividend of 15.0 cents per share fully franked, payable on 23 April 2020.
By AEDT 3:12 PM, LOV stock was trading at $11.920, up by 5.48% intraday, with a market cap of $1.2 billion.
Woolworths Group Limited (ASX: WOW)
Australia’s leading retailer, Woolworths Group Limited recently advised the completion of the Restructure Scheme and ALH Merger to combine its retail drinks business and ALH Group to create Endeavour Group and is considering the options for the planned separation of Endeavour Group, which is expected to occur later in CY2020. Woolworths intends to report its first half results of FY20 on 26 February 2020.
In the last six months, WOW stock price increased by 23.14% on ASX. At the time of writing at $43.510, near to its 52 weeks high price of $43.960.
Myer Holdings Limited (ASX: MYR)
Myer Holdings Limited runs departmental store business in Australia. During the last financial year, the company’s total sales decreased by 3.5% to $2.99 billion and comparable store sales were down 2.9%, in part reflecting the company’s focus on profitable sales. During the period, the company’s operating gross profit declined by 1.9% to $1.16 billion and OGP margin increased by 65 basis points to 38.9%, driven by an improved Myer Exclusive Brands mix as well as lower promotional markdowns and shrinkage.
In the past six months, MYR stock price declined by 26.42% on ASX. By AEDT 3:12 PM, MYR stock was trading at $0.390 with a market cap of $320.3 million.
