Thursday's announcement from Super Retail Group (ASX:SUL) was a mixed bag. While the company reported record annual sales and a special dividend, investors also faced a decline in earnings.
The special dividend, although a welcome surprise, overshadowed a decrease in the ordinary dividend for the latest financial year. Despite this, the announcement boosted share prices as investors overlooked the ongoing controversy surrounding discrimination and other allegations from former senior managers.
Super Retail Group, which owns Rebel Sport, Supercheap Auto, BCF, and Macpac, posted a modest 2.1% increase in sales to a record $3.88 billion for the year ending June. The company also declared a special dividend of 50 cents per share, up from the 25 cents per share paid in the previous year.
While the total dividend for the year increased, the ordinary dividends for 2023-24 were lower than the previous year due to rising costs and lower earnings. The doubled one-off payout seemed to be a strategic move to appease shareholders and distract from the negative publicity surrounding the company's management issues.
Supercheap, the company's core business, experienced a 3% increase in sales, while BCF and Macpac reported improved performance. However, Rebel's turnover declined by 1%.
Statutory net profit after tax decreased by 9% compared to the previous year, while normalised net profit after tax fell by 11% to $242 million, slightly below analysts' expectations. Online sales increased by 9% to $485 million.
Despite increased promotional activity from competitors, the group's gross margin improved by 10 basis points to 46.3%. However, higher wages and rent pushed up the cost of doing business by 120 basis points to approximately 36%.
Super Retail Group continues to invest in its store network through new openings, refurbishments, and the rollout of new formats. These initiatives are expected to drive future revenue growth.
Investors pushed the shares up by 6% by mid-afternoon, primarily driven by the stronger start to the 2024-25 financial year. The company reported a 3% like-for-like sales growth and a 5% total sales growth in the first seven weeks of the year, with solid improvement in Supercheap, Macpac, and BCF. However, Rebel continues to lag behind.
This marks a stronger start for same-store sales and headline sales compared to the previous year. The shares have increased by more than 34% in the past year.
