The Super Retail Group Ltd (ASX: SUL) share price will be one to watch today after the retailer released a trading update at the Macquarie Australia Conference.
According to the release the company's performance has remained strong in the last three months, leading to management reiterating its annual earnings before interest and tax (EBIT) growth guidance of between 16% and 18%.
An impressive performance from its key Sports and Auto segments has been the key catalyst for this growth.
The two segments contribute approximately 44% and 46%, respectively, of total company EBIT, so their performance has an enormous impact on the company's overall performance.
Pleasingly for the 43 weeks to 29 April 2017 they have delivered sales growth of 8% and 4.5%, with like-for-like sales growth increasing 4.5% and 3% respectively.
Should you invest?
I've been impressed with Super Retail's performance over the last 12 months and can't say I'm surprised to see its shares climb higher today.
Whilst its shares look to be good value at under 15x trailing earnings and providing a trailing fully franked 4.5% dividend, I do have concerns over its future growth.
I feel that Super Retail is one of a number of retailers which lacks an all-important economic moat to protect itself against the potential arrival of Amazon in Australia.
So for this reason I would suggest investors approach it with caution. Investors looking for exposure to the retail sector may want to consider Noni B Limited (ASX: NBL) and Premier Investments Limited (ASX: PMV) instead.
I believe these two companies are less likely to be impacted by Amazon's arrival due to their target demographics and strong brands.
