Shares in Super Retail Group (SUL) were dealt with rather generously yesterday by investors after it revealed its third earnings downgrade this year.
The shares ended up 2.8% or 23c at $8.28 after they dropped 14c in early trading to $7.89 in the wake of the downgrade which was released before the market opened.
That low of $7.89 was a 52 week low – in fact it was the lowest the shares have been for more than two years, as was the close yesterday.
Super said in the trading update that the loss of consumer confidence and the warm autumn combined to hit sales and profits in April and May.
Sales have suffered significantly since the Coalition government released its first federal budget six weeks ago, Super Retail told the ASX yesterday.
“This reflects the significant downturn in consumer confidence since the federal budget, particularly across the lower to mid income families who represent [Super Retail’s] core customers,” the company said.
The company joins the likes of Pacific Brands, Noni B, RCG Group, Nuplex and The Reject Shop in revealing how the adverse impact on consumer confidence has added to the negative impact on sales and earnings growth from the warm autumn ( it was a record dry in some markets).
Super Retail now expects full-year net profit to be up just 5% from the previous financial year, coming in between $107 million and $109 million.
Many brokers had estimated the company would earn around $115 million in 2013-14.
Normally that sort of shortfall would see brief trading panic as the shares were sold off heavily, only to regain much of the losses over the next week or so.
SUL 1Y – Super Retail joins the downgraders, but shares survive
The announcement comes a little over a month since Super Retail issued its second profit warning, with like-for-like (same store) sales in its leisure division, which includes Rays Outdoors, Boating Camping and Fishing and FCO, remaining weak.
The company said that in the 50 weeks to June 14, like-for-like sales were flat in leisure.
However, comparable sales growth in its auto and sports division were up 2.2% and 2.9% respectively.
That’s just under and equal to inflation which means the company has been marking time for much of the past year.
The company expects the weak to continue for the remaining two weeks of the financial year.
Super Retail managing director Peter Birtles said it was extremely disappointing to further lower profit guidance, however he was confident that the downgrade was a result of external factors rather than internal problems.
One broker said yesterday that with three profit warnings, Mr Birtles and the company would have to reassure the market that there are not problems within Super Retail’s operations that have helped add to the pressures on sales and earnings growth.
