Super Retail Group reports record $3.8 billion sales, strong profit

Super Retail Group (ASX: SUL), made up of  Supercheap Auto, Rebel, BCF, and Macpac, has reported a 7.1 per cent revenue increase to $ 3.8 billion and a normalised net profit after tax (NPAT) of $ 274 million for the 2023 financial year.

The Group’s like-for-like sales growth (referring to sales growth as recorded by the same number of stores a year ago) has seen a slightly higher 8 per cent lift.

Despite solid growth, sales softened in the second half of FY23. Overall, like-for-like sales growth dropped from 11 per cent in 1H23 to 6 per cent in 2H23, with Supercheap Auto shrinking from 15 per cent to 6 per cent and Rebel declining from 11 per cent to 7 per cent over the same period.

Group Managing Director and CEO Anthony Heraghty acknowledged a challenging economic environment: “Sales growth has continued to moderate as the Group cycles strong sales in the prior year and rising interest rates and cost of living pressures dampen consumer spending.”

Despite growth decelerating, the Group continued to expand its physical footprint. The last financial year saw 24 new stores opened, including the launch of BCF superstores in Townsville and Kawana. An additional 24 stores are said to open in FY24.

Online sales have experienced a significant contraction, down to $445 million (12 per cent of total revenue in FY23) from $601 million (17 per cent of total revenue in FY22).

The online sales squeeze is a recurring theme amongst retailers this year. For example, Power Retail recently reported that JB Hi-Fi’s online sales fell from 20.9 per cent in FY22 to 14.4 per cent, as shown in FY23 yearly results. These figures point to a strong 1H22 period for online sales, with buying habits affected by lockdowns and store closures, followed by a normalisation as shoppers returned to in-store shopping in 2H22.

On the other hand, omnichannel seems to remain an embedded behaviour for shoppers post-pandemic. Click and Collect sales comprised 48 per cent of the Group’s online sales, with Supercheap Auto’s seeing the highest at 74 per cent.

The Group called out key strategic drivers, saying $58 million has already gone into omni-retailing capabilities, data, cyber, networking, core information systems, and loyalty and personalisation.

Plans are also in motion to open a new 65,000 square metre automated distribution centre (DC) in Victoria. Construction of the DC is scheduled to commence in H1 FY24, subject to development approvals, with completion expected by H1 FY26.

Looking forward, price-conscious consumers are in focus for the Group. Heraghty notes, “Our customer value proposition and low average ticket price means we are well positioned for a more value-conscious consumer environment.”

Heraghty further stated the Group’s strategic priorities for the year ahead, including the connection of its retail supply chain, simplifying the business, “excelling in only retail”, and focusing on the omnichannel shopping experience. Additionally, it aims to improve “closeness to customers” – referring to club memberships, BCF and SCA personalisation initiatives, customer analysis, and a Rebel loyalty program relaunch planned for H1 FY24.