Since peaking at as high as $11.00 in March of this year the Super Retail Group Ltd (ASX: SUL) share price has fallen over 26% to $8.09.
General weakness in the retail sector and concerns over the impact of Amazon have largely been behind the slump in its shares.
Industry peers Accent Group Ltd (ASX: AX1) and Bapcor Ltd (ASX: BAP) have also seen their shares come under pressure during this time.
Is it safe to buy Super Retail shares now?
I think it is. Especially as its shares are changing hands at an undemanding 11x estimated forward earnings and provide investors with a trailing fully franked 5.7% dividend.
Furthermore, Super Retail has been preparing for the Amazon launch for some time. One initiative the company undertook was the conversion of its Amart stores to the Rebel Sports brand.
Management believes this "brings together Rebel's strengths in solutions and services with Amart Sports' customer service excellence into the one strong, national omni Sports retailer." As well as this, it is expected to result in higher margins and cost savings due to synergies and the elimination of underperforming categories.
Things appear to have been going well so far. Sales in its Sports segment had grown 5% on the prior corresponding period during the first 16 weeks of FY 2018. This complemented the solid growth being witnessed in both its Auto and Leisure segments.
Overall, I feel the company is on course to deliver a mid-to-high-single digit increase in earnings in FY 2018, more than justifying a rerating of its shares higher in the coming months. This could make it a great option for investors today.
