Why Super Retail Group Ltd (ASX:SUL) shares just crashed lower

The Super Retail Group Ltd (ASX:SUL) share price crashed lower today after the surprise retirement of its CEO…

| 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

After a reasonably positive start to the day the Super Retail Group Ltd (ASX: SUL) share price has crashed lower in early afternoon trade.

At the time of writing the retailer's shares are down a sizeable 12.5% to $8.18.

Why are Super Retail's shares crashing lower?

Super Retail is holding its annual general meeting and has provided investors with an update on its performance and announced a change in the top job.

In respect to the latter, managing director and chief executive officer Peter Birtles will retire in the second quarter of the 2019 calendar year. The exact timing of his departure will be determined by the outcome of an executive recruitment process.

Unfortunately, this news has overshadowed the company's reasonably positive start to FY 2019.

Although like for like sales have slowed a little since the start of the year, each business has reported growth in this metric over the 16 weeks to October 20.

The Macpac business has been the best performer in its portfolio and has seen like for like sales accelerate since the start of the year. As of October 20, Macpac's like for like sales were up 8.4% and total sales were up 17.6% on the prior corresponding period.

The next best performer was its Supercheap Auto business which reported total sales growth of 4.1% and like for like sales growth of 3.1%.

Elsewhere, the Rebel business posted like for like sales growth of 2.4% and total sales growth of 4%, and the BCF business has seen like for like sales rise 2.4% and total sales increase 1.7%.

Also taking the shine of this positive performance were comments from Mr Birtles. While he was pleased with the positive start to the year, he warned that there have been "signs that the retail consumer is being more cautious."

As a result, he stressed that the company would act carefully to "get the balance right between driving sales and managing margin as we move into the major trading period of the year."

Should you buy the dip?

While a change of CEO can be disruptive and is a reason to be concerned, I thought that Super Retail's update was one of the best I'd seen in the retail sector so far in FY 2019.

So with its shares changing hands at under 11x estimated forward earnings, I think it could be worth considering an investment at these levels. Especially with its generous dividend yield.

Overall, the retail sector is certainly looking like a hard place to invest, but I believe the risk/rewards on offer with Super Retail, Adairs Ltd (ASX: ADH), and Kogan.com Ltd (ASX: KGN) are compelling right now.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Super Retail Group Limited. The Motley Fool Australia has recommended Kogan.com ltd. 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.

More on Share Fallers

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A worried man holds his head and look at his computer.
Share Fallers

Why 29Metals, Brainchip, Platinum, and Premier Investments shares are falling today

These ASX shares are having a tough time on hump day.

Read more »

Man with his head in his head because of falling share price.
Share Fallers

Why 29Metals, Atlas Arteria, IDP Education, and Mineral Resources shares are falling

These ASX shares are having a tough time on Tuesday. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why ALS, EOS, NRW, and Patriot Battery Metals are dropping today

These ASX shares are starting the week in the red.

Read more »

A man looking at his laptop and thinking.
Technology Shares

Why are these ASX tech shares getting smashed today?

Owners of these two stocks are missing out today.

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Share Fallers

Why AGL, Brickworks, IGO, and New Hope shares are dropping today

These ASX shares are having a poor session. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Amcor, Arafura, Brainchip, and South32 shares are tumbling today

These ASX shares are having a tough time on hump day. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Aussie Broadband, Liontown, Metals Acquisition, and Seek shares are falling

These ASX shares are having a poor session. But why?

Read more »