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Why the Super Retail Group share price crashed to a 52-week low today

Although the market bounced notably higher on Thursday, the same cannot be said for the Super Retail Group Ltd (ASX: SUL) share price.

The retail group’s shares finished the day 5.5% lower at $6.46. At one stage they sank to a 52-week low of $6.42.

Why did the Super Retail share price sink to a 52-week low?

The catalyst for this decline was a trading update released by fellow retailer Kathmandu Holdings Ltd (ASX: KMD) this morning.

In November the outdoor retailer advised that it expected its first half profit to be “strongly above last year.” This was dependent on the success of its summer sale.

Unfortunately, the summer sale failed to sparkle and has led to a sharp drop in same store sales.

At the 15-week mark Kathmandu’s same store sales were up 6.3% on the prior corresponding period. Fast-forward seven weeks to the 22-week mark and they are now down 1% on the prior corresponding period.

This shocking performance has unsurprisingly sparked fears that the retail industry may have struggled during the Christmas period and led to reasonable declines for the shares of retailers such as Accent Group Ltd (ASX: AX1), JB Hi-Fi Limited (ASX: JBH), Myer Holdings Ltd (ASX: MYR), and of course Super Retail today.

Super Retail has been a particularly poor performer due to the fact that its BCF and Macpac brands offer similar products to Kathmandu.

Though, it is worth noting that at this point it is unclear whether Kathmandu’s underperformance is due to the poor execution of its summer sale strategy or consumers simply not spending as they did a year earlier.

I suspect the reason will become clear in the coming weeks as more retailers provide trading updates ahead of earnings season in February and March.

One thing for sure, though, is that I feel Super Retail shares would be an absolute bargain buy if it has had a positive holiday period.

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 Accent Group. 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.

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