Why Are The Retails Sectors Down? – SUL And AX1

  • Jan 03, 2019 AEDT
  • Team Kalkine
Why Are The Retails Sectors Down? – SUL And AX1

Most of the Australian retail sector stocks have demonstrated dismal performance recently with heightened competition as well as Amazon’s strict market grabbing business strategy. Investors may want to stay cautious on below mentioned two stocks which closed in red today.

Accent Group Limited (ASX: AX1), formerly known as RCG Corporation Limited, is a leading footwear retailer and distributor in Australia and New Zealand. It owns over 446 stores across ten different retail banners with exclusive distribution rights for ten international brands such as Dr. Martens, Skechers, Vans, CAT, Timberland and many more.

Over the last three months, the stock price is down by around 26.77% amidst global growth concerns, recession forecasts for the US, uncertain Brexit situation and Sino-US trade war. With the close of the trading session today, the share price stands at AUD 1.160 (down by 2.5%).  

However, it is equally important to consider that the company’s stock has witnessed a strong performance growth of 41.67% till date this year. The share price has soared from AUD 0.840 on 2 June 2018 to AUD 1.190 on 2 June 2019.

Investors may want to keep AX1 shares in their watchlist given the positive recently released annual financial results of the company. An underlying EBITDA of $90.8 million is reported for this year, representing an increase of 16% over the prior year. A net profit after tax of $47.1 million is recorded for the year. The dividend pay-out increased by 25% over last year, with a fully franked dividend of 3.75 cents per share. The retail sales of the company rose by 12% this year to $566.9 million owing to new store openings and an increase in digital sales. On 23rd November 2018, the company revised its EBITDA expectations for H1 FY2019 to be between 15%-20% ahead as compared to last year.

Super Retail Group Limited (ASX: SUL) is a leading retail industry player in Australian market operating significant brands such as BCF, Macpac, Rebel and Supercheap Auto.

The company recently shared its annual financial results. An increase of 26.7% in profit was recorded. The operating cash flows rose by 31.5%. Basic earnings per share increased from 51.6 cents last year to 65 cents this year, representing an increase of 26%. Total sales recorded at $2570.4 million, increased by 4.2%, which includes $31.4 million sales of newly acquired Macpac. The company’s net assets stood at $44.6 million and net debt at $422.9 million. The company had declared an annual fully franked dividend of 49 cents per share, representing an increase of 5.4 % over last year. However, the company anticipated certain business risks likely to impact future financial performance- intensified competition, adapting to changing customer expectations, Omni-retail transformation and compliance issues.

Despite reporting robust annual financial performance, the price of the scrip is trading on the downside from the past one year falling by almost 17% (AUD 8.250 on 2 January 2018 to AUD 6.830 on 2 January 2019).  The shares have plunged by 22.30% over the last three months. With the close of trading session today, the company’s stock crashed down by 5.5%, closing at AUD 6.460.


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