Shares of Super Retail Group have taken a hit after RBC Capital Markets analyst Michael Toner noted that the company’s first-half profit guidance fell short of market expectations. Super Retail Group, an Australian retailer known for its brands in the sporting, automotive, and outdoor sectors, owns Supercheap Auto, Rebel, BCF, and Macpac, which serve a wide variety of consumer needs.
The company’s underlying profit before tax, guided between $172 million to $175 million, missed RBC’s estimates by 5.7% and consensus estimates by 7.1%. Toner attributed this shortfall primarily to increased discounting and promotional activity within the Rebel sports merchandise chain. Although total like-for-like sales grew by 2.5%, Supercheap Auto and Rebel saw an acceleration in growth, while BCF experienced a slowdown.
Weather and Environmental Impacts
The outdoor retailer BCF was notably impacted by weather conditions, especially in Victoria and South Australia. These environmental factors contributed to weaker-than-expected performance in this segment. Gross margins remained flat across the group, which was weaker than anticipated. Additionally, Macpac’s margins contracted due to clearance activity, while Rebel’s performance resulted in a 13.7% miss in profit before tax compared to consensus estimates.
Analyst’s Outlook
Toner highlighted that the market is likely to focus on the weaker margins, which could signal a negative trend for apparel retailers’ profitability moving into December. RBC Capital Markets maintains a ‘sector perform’ rating on Super Retail Group, with a price target of $18.20 per share.
Following the profit guidance announcement, shares in Super Retail Group were trading down 6.7%, reflecting the market’s reaction to the disappointing results.
