Shares in automotive, sports and leisure retailer. the Super Retail Group (SUL), enjoyed a solid bounce yesterday after the company forecast modest growth in the current half after a rough end to 2013-14.
That saw the shares jump more than 5% to $9.18.
The owner of Supercheap Auto and Rebel sports chain has posted a 5.6% rise in net profit to $108.4 million for the 12 months to June 28.
This was in line with the group’s profit reduced forecast of June for net earnings of between $107 million and $109 million, after the company saw sales slow because of the warm autumn and the slide in consumer confidence after the budget.
The higher result was struck on a 4.6% rise in revenue to $2.11 billion, from the $2.02billion reported in 2012-13. That was described by the company to analysts as a ‘solid‘ outcome , but one which "was below expectations".
The company’s earnings before interest, tax, depreciation and amortisation rose increase $237.5 million.
The group will pay a fully franked final dividend of 21.5c a share, taking the total for the year to 40c, up 5.3% on 2012-13.
SUL 1Y – Super Retail up on slightly better outlook
And looking to the 2014-15 year, the company’s managing director Peter Birtles said the group expects sales growth to gradually recover.
"We expect like-for-like growth in the first half of the year to be modest given the strong growth in the first half of the prior year and the softness in consumer confidence.
"But we expect higher second half growth as benefits from operating improvements are delivered and as we cycle less demanding comparatives," Mr Birtles said.
He said earnings margins were expected to grow across the group through a combination of sourcing, ranging, promotions and cost management initiatives. (That sounds a bit like the recipe from the Reject Shop on Wednesday as it looks to rejuvenate its sales and earnings over the next year.)
In the first six weeks, the company’s like-for-like sales are just ahead of the prior year. Mr Birtles said that was a strong improvement on the trend experienced over the last eight weeks of the prior year.
"We expect like for like growth in the first half of the year to be modest given the strong growth in the first half of the prior year and the softness in consumer confidence but we expect higher second half growth as benefits from operating improvements are delivered and as we cycle less demanding comparatives.
"We expect to grow both gross and EBITDA margins across the Group through a combination of sourcing, ranging, promotions and cost management initiatives. EBIT margin growth will be lower as we incur increased depreciation charges resulting from the supply chain and information systems investment over the last two years.
"The new financial year started in line with our expectations.
"In the first six weeks, Group like for like sales are just ahead of the prior year which is a strong improvement on the trend experienced over the last eight weeks of the prior year.
"We are planning to open between 20 and 30 new stores and expect to refurbish between 70 and 80 stores across the Group.
"We will complete the development of our new logistics network, opening our new distribution centres at Brendale in Queensland and reconfiguring our facilities in Perth, Melbourne and New Zealand,” Mr Birtles said.
