Super Retail Group has released its latest Trading and Strategy Update at the Macquarie Securities 2018 Australia Conference, reporting better-than-expected performance.
According to the report, performance has been “in-line with expectations”, as Super Cheap Auto is on track to hold its full-year margins in-line with the prior comparative period, while Rebel is tracking 0.1 percent behind and BCF has fallen one percentage point below the previous comparative period.
The group’s Managing Director, Peter Birtles told the conference he expects the recently acquired Macpac business to give the company the boost it needs.
“We continue to expect that we will hold full year Group EBIT margin in line with the prior comparative period especially when recognising the contribution from the recently acquired Macpac business,” he said.
“The acquisition of Macpac was completed on 5 April 2018 and the business is expected to contribute circa $5 million to Group EBIT in the balance of the 2018 financial year.”
Over the last 12-months, Super Retail Group has had one of the worst-performing stocks on the ASX, with the businesses latest trading update revealing the best results the company has achieved in the last three years.
Birtles attributes some of the group’s financial difficulties to strong competition coming from the Australian launch of global sporting goods retailer, Decathlon and online marketplaces, such as Amazon. According to Birtles, newcomer JD. Com has had a minimal impact on the company’s trading results, but Decathlon was “probably” impacting a number of rebel stores, while he confirmed that Amazon’s growing product list is a concern.
“As Amazon ramp up as they launch their full offering, which we will potentially see later this year… we would still anticipate there will be some pricing pressure coming through,” Birtles said.
Decathlon’s mega-store in Sydney’s Tempe was drawing customers from a wide geography “and therefore it’s probably impacting quite a number of Rebel stores”.
Moving forward, Birtle says Rebel Sport will be shifting its focus to more sport and less fashion, to differentiate the sporting retailers product offering from the likes of Decathlon. However, footwear has consistently been performing and will play a big part in Rebel’s brand, as the Amart brand is dissolved into Rebel.
“A core part of the Amart brand historically has been value in footwear and that’s something as we transition to Rebel we have to make sure we don’t lose that value in footwear component – we will see Rebel being very active in value footwear as an area going forward.”
An expansion of private label ranges and an investment in price, online offerings, and improved delivery services are all also said to be in the works as the brand strives to protect Super Retail Group’s market share.
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