Super Retail Group, which houses brands like rebel, BCF and Supercheap Auto, has had a rough start to the FY, with the Omicron variant making a huge impact on the group's performance.
Super Retail Group’s share prices have plunged following a rocky update for the HY. Its digital sales have been the shining light for the Group, increasing across all four core brands in the first half of FY22.
In the recent HY update, Super Retail Group reported an increase in its digital sales, up 64 percent to $389 million.
This was driven by the investment in its digital and physical strategies, and navigating in-store lockdowns via an omnichannel execution. As a result, Click & Collect sales increased by 109 percent.
However, this growth was offset by its Gross Margin, one percent lower than the same period last year (46.7 percent v 47.7 percent). Furthermore, its group Sales were also in decline YoY, reporting $1.7 billion for the first half of the year, excluding Boxing Day sales. This is four percent lower than the same period in 2021 but is still 18.1 percent higher than 2020.
First half like-for-like sales were 4.8 percent below H1 Fy21, but 17.1 percent above the same period in 2020. Like-for-like sales grew 3.6 percent in the final ten weeks.
Its cash flow has seen a decline of $370.2 million to $157 million. This cash flow reflects on the investment of its inventory to ensure stock availability, unwinding of temporarily adjusted trading terms with trade partners, increasing working capital requirements. A $67 million tax payment was made in the first half.
Capital investment was $63.3 million, which is an increase of $33.9 million on pcp, which reflects on investments in new stores and refurbishments – up by $21.5 million. A further $12.4 million investment was made for omnichannel and other IT projects.
“We are pleased to have delivered a strong top-line sales performance in the first half, despite the challenges of Omicron and a disrupted global supply chain,” said Anthony Heraghty, the CEO and MD of Super Retail Group. “After Covid-19 lockdowns disrupted trade in the first quarter, we delivered a fast finish to the half, achieving a record second-quarter sales result. We entered the second half with strong sales momentum, which has continued in the new calendar year,” he continued.
“Looking forward, the group will continue to reinvest in the business, including digital, loyalty and network to execute our strategic priorities and grow our four core brands.”
As a result of pandemic-fulled lockdowns, there was a higher wage cost, due to retaining staff and increasing digital costs. Digital sales increased by 64 percent in the first half of FY22, representing 23 percent of global sales. Similarly, Click & Collect sales were up, increasing by 109 percent to $226 million – this channel now represents 58 percent of Group online sales.
Heraghty explained that the ongoing investment into omnichannel retail allowed the businesses to adapt to the ever-changing consumer behaviour and shopping sentiment.
For Supercheap Auto, sales declined 6.9 percent on the pcp to $616.1 million. However, these figures increased by 11.9 percent on a two-year basis. Like-for-like sales further declined by 6.2 percent on the pcp, but the Group assured there has been a rebound in sales in the second quarter. According to the Group, there has been a 4.1 percent increase in like-for-like sales in the final ten weeks. Online sales grew by 98 percent to $107.3 million and represented 17 percent of total sales.
BCF also reported a decrease in sales, 2.2 percent lower than the pcp to $418.5 million. Similar to Supercheap Auto, BCF reported a 47.6 percent increase on a two-year basis. Like-for-like sales also slumped 2.4 percent on the pcp, but sales have increased 7.2 percent in the final ten weeks. In a similar vein to Supercheap Auto, online sales have increased by 51 percent ($76 million), now representing 17 percent of total sales.
The only retailer to report an increase in sales was Macpac, which grew by four percent on the pcp to $465.5 million. According to the Group, this is likely due to the recent new store openings and positive like-for-like sales in Australia.
Like-for-like sales increased by 7.2 percent, driven by growth in rainwear and insulation. This growth was offset by New Zealand, which reported a 9.4 percent decline in like-for-like sales. This was due to store closures as a result of the pandemic, the Group explained. Online sales grew by 45 percent to $18.7 million, now representing 29 percent of total sales.
Another retailer from the Group, rebel, reported a decline in sales on the pcp. Total sales decreased by 2.3 percent to $605.6 million but increased by 11.6 percent on a two-year basis. Like-for-like sales dropped by 5.4 percent on the pcp but still were 10.9 percent above 2020 levels. Similarly to all other brands, rebel’s online sales grew by 56 percent to $187.4 million, representing 31 percent of total sales.
“It has been a positive start to the year. We have seen an encouraging uplift in sales momentum as the second half has progressed, with consumer caution starting to recede,” said Heraghty. “While COVID-19 continues to cause disruption to our customers, team members and trade partners, the group remains focused on executing our business strategy and investing for growth to deliver long-term value for our shareholders.”
The retailer’s HY results have resulted in its share prices plunging from $12.69 at opening on Monday to $11.63 a share on Tuesday. These prices have since somewhat established to $11.66, but remains 7.1 percent below the YTD shares.
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