The Super Retail Group Ltd (ASX: SUL) share price has rocketed 12% higher to $10.20 in morning trade following the release of its full-year results.
This morning the retailer announced a net profit after tax of $128.3 million on total sales of $2,570 million for the 12 months ended June 30 2018. This was a 26% and 4.2% increase, respectively, on FY 2017’s result.
After adjusting for items not included in total segment net profit after tax, normalised net profit after tax rose 7% year-on-year to $145.3 million. This solid profit result allowed the board to declare a final dividend of 27.5 cents per share, lifting its full-year dividend by 5.4% year-on-year to 49 cents.
The star performer for Super Retail in FY 2018 was its Auto Retailing segment once again. Segment sales increased by 5.3% to $1,006.4 million, with like for like growth of 3.6%, driven by growth in transaction numbers, number of items per transaction, and average item value.
Segment EBIT grew by 4.9% during the year to $116.4 million, with its EBIT margin in line with the prior comparative period at 11.6%.
The company’s Outdoor Retailing segment, formerly known as its Leisure segment, delivered a much-improved performance. The segment, which includes the BCF, Rays, and Macpac businesses, achieved sales of $579.8 million and EBIT of $29.6 million. This was a 4.8% and 16.5% increase, respectively, on the prior corresponding period.
The addition of the Macpac brand at the end of March gave the segment a boost and looks set to carry on doing so in FY 2019. Management is busy retiring the Rays Outdoor brand and converting suitable stores into Macpac large format stores.
Sales from its Sports Retailing segment also contributed to its overall sales growth. Segment sales grew 3.2% to $979.2 million thanks partly to 2% growth in like for like sales. However, segment EBIT only grew 0.2% to $91.5 million due to an increase in promotional activity associated with the Amart transition.
Operating cash flow pre-store investment was $322.1 million and closing net debt was $422.9 million, which was only $42.2 million higher than the prior year despite the $133.8 million acquisition of Macpac.
Super Retail has had a solid start to FY 2019 with each of its businesses delivering positive like for like sales growth. Like for likes sales growth has been 5% for Supercheap Auto, 3% for Rebel, 3% for BCF, and 7% for Macpac.
In the medium term management is targeting annual revenue growth of 14% to 18% for its Macpac brand and 4% to 6% for the other brands.
Should you invest?
Super Retail generated earnings per share of 64.5 cents in FY 2018, meaning its shares are still changing hands at 16x earnings even after today’s push higher. I think this is great value for a company expecting to grow at a solid rate over the medium term and providing a generous dividend yield of 4.8%.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of Super Retail Group Limited. 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 Scott Phillips.