Super Retail Group (SUL) says it had made a solid start to the 2017 financial year, with profit in line with budget, but its core car products and tool group, the foundation Supercheap Auto chain, is feeling the pinch from the wind down of the failed Masters chain of hardware stores by Woolworths (WOW).
While group sales had been below expectations, this had been offset by supply chain developments and cost controls, Super Retail CEO, Peter Birtles said in a statement before yesterday’s annual meeting which saw long time director, John Skippen unexpectedly quit before the meeting started.
Super Cheap shares ended down 3% at $10.26.
Super Retail said sales in its Amart Sports and Rebel stores sport division had been “pleasing” in the 16 weeks to October 22, with the sports divisions sales up 7% overall and 4.5% on a same store basis, compared with the same period last year.
Mr Birtles said cost cuts across the group had offset the slower sales growth, and gross (profit) margin was also tracking ahead of the prior comparative period, he added.
And while sales from its auto division, dominated by Supercheap Auto, rose 3.5% (and 2.5% on a same store basis) tool sales had been hurt by the closure of Masters and its cut price closing down sale.
“Sales performance in the automotive categories within the Supercheap Auto business has been solid, however, competitor clearance activity in the hardware retail sector has had a negative impact on sales in the business’ tools categories," chief executive Peter Birtles said yesterday’s statement.
Mr Birtles said that negative impact was likely to continue throughout the first half but Supercheap Auto’s market share could grow in the second half of 2016-17.
And Supercheap is doing a little clearance activity of its own as it closes its old Ray’s Outdoors stores. That boosted like-for-like sales, but weakened growth across its BCF and new-format Rays stores. Overall, sales in the leisure division were up just 1.5% and 6% on a like-for-like basis.
Mr Birtles said Super Retail expects to open 15 new stores in the auto division, 14 new BCF stores and another 14 in the sports division in 2016-17.
But it was the surprise departure of John Skippen, the chairman of embattled law firm Slater & Gordon from the Super Retail Group board yesterday that grabbed the headlines, and will hold this Tuesday morning.
Mr Skippen, was facing opposition to his continued presence on the board from corporate governance groups. Media reports said he informed the rest of the board of his decision before the AGM, and it was announced to the ASX as the meeting began.
Mr Skippen’s resignation led to the resolution to reappoint him being withdrawn. Of the votes cast, 56%, were in favour of his re-election while 43% of all eligible votes abstained, which was a high number.
Media reports said Mr Skippen faced strong opposition from certain institutional shareholders to retaining his role on the board because of his role at Slater and Gordon where the company faces a continuing struggle to survive and a $250 million class action.
Now they don’t have to worry.
Two recently appointed Supercheap directors – Launa Inman and Diana Eilert were re-elected to the board at yesterday’s AGM.
