Super Retail Group Ltd shares fall on trading update: What you need to know

Shares of Super Retail Group Ltd (ASX:SUL) were trading 2% lower after the group's trading update today.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sporting and leisure goods retailer Super Retail Group Ltd (ASX: SUL) held its Annual General Meeting in Queensland today, while it also provided a trading update for its performance so far in financial year 2017 (FY17).

In the 16 weeks since the beginning of FY17, its Sports Retailing division, comprised of Amart Sports and Rebel, has generated sales growth of 7%, with like-for-like sales growing at an impressive 4.5%. Like-for-like growth, also referred to as same store sales growth, or SSS, excludes the impact of more recently opened stores, focusing solely on those that were open in the previous corresponding period to provide a more comparable base.

Meanwhile, its Leisure Retailing division (Rays – formerly Ray's Outdoors – and BCF) experienced SSS growth of 6%, although total sales were up just 1.5% due to dozens of store closures, with SSS growth in its Auto Retailing division (Supercheap Auto) up 2.5%. The company said that Supercheap Auto has an opportunity to grow its market share in the second-half of the year, although investors should note that rival Autobarn – owned by Bapcor Ltd (ASX: BAP) – enjoyed like-for-like sales growth of 4.5% over what was roughly the same period.

Although each of its operating divisions have so far reported sales growth this financial year, the shares still retreated 2% after the announcements were made. This could be attributed to comments made by the group's CEO, Mr Peter Birtles, who said group sales performance had been behind expectations, although this was offset by cost reductions and benefits from its supply chain development program.

Mr Birtles also said:

"We continue to grow our network of stores across the Group. We expect to open up to 15 new stores in the Auto Division and refurbish up to 45 stores during the financial year. In the Leisure Division, we expect to open 14 new BCF stores, including the 11 converted from Ray's Outdoors and convert nine Rays Outdoors stores to new format Rays. In the Sports Division, we expect to open 14 new stores, including five converted from Ray's Outdoors."

Since it first listed its shares on the ASX in 2004, Super Retail Group has generated handsome returns for investors – in the form of both capital gains and dividends which it has grown strongly over the years (41.5 cents per share in FY16, compared to 10.5 cents in FY07).

Although there is a lot to like about Super Retail Group investors do need to be conscious of the potential headwinds facing the business – and the industry as a whole. Indeed, consumers are increasingly turning to webpages to do their shopping online with a number of international sellers able to sell their products at far cheaper rates than the brands under Super Retail Group can. This has the potential to impact sales significantly over the coming years.

That said, Super Retail Group is worthy of a closer look by investors who are keen to gain exposure to the retail industry. Its shares are currently trading at $10.39, down from a 52-week high of $11.59.

Motley Fool contributor Ryan Newman owns shares of Bapcor. The Motley Fool Australia owns shares of Bapcor. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »