The Super Retail Group Ltd (ASX: SUL) share price has jumped more than 15% over the past month. But despite the higher trading price, a Super Retail director bought shares in the S&P/ASX 200 Index (ASX: XJO) retail stock just last week.
Zooming out, there has been a lot of volatility on the ASX this year, and the Super Retail share price is still down 17% for the year.
Super Retail is the parent business of well-known Australian brands, including BCF, Supercheap Auto, Rebel and Macpac.
What's going on with Super Retail shares?
Companies are currently facing several economic challenges, such as inflation and higher interest rates. How does this play out in terms of demand for retailers?
So far, there don't seem to be many negative effects for Super Retail. The company recently gave a trading update showing like-for-like sales growth in FY23 compared to FY22.
It advised that in the first 16 weeks of FY23, Supercheap sales were up 23%, Rebel sales were up 20%, BCF sales were up 4%, and Macpac sales were up 76%. In total, like-for-like sales had increased by 20%.
However, Super Retail cautioned investors against "extrapolating this growth", given the group was cycling against lockdowns in the prior comparative period (pcp).
Online sales represented 10% of the total FY23 sales to date. While sales were up, the group gross profit margin in percentage terms for the first 16 weeks of FY23 was in line with the gross profit margin delivered in the pcp.
Director buying
In a recent ASX announcement, Super Retail advised that director Peter Dobie Everingham had increased his holding of Super Retail shares.
Directors buying shares can be a buy signal, suggesting that the leadership thinks the company's valuation is attractive.
With an on-market investment, Everingham purchased another 20,000 shares for a total cost of $201,716. This means that the cost was at a Super Retail share price of close to $10.10.
After that investment, Everingham now holds 60,000 shares.
Is there a good outlook for the Super Retail share price?
With so much volatility over the past year, it's hard to say what will happen next with the ASX 200 share. The share price can perform very differently from the revenue and profit numbers reported by the business.
Super Retail CEO and managing director Anthony Heraghty said:
While current trading remains strong, the group expects higher mortgage rates and increased cost of living expenses will begin to impact consumer spending. The value proposition of the Group's brands, our large active club member base and the resilience of our key auto and sports categories mean the Group is well positioned for more challenging retail trading conditions ahead.
As always, the Group's first half result will be highly dependent on trading in the peak Christmas holiday period.
The broker Credit Suisse is particularly optimistic about the business. It has an outperform rating, with a price target of $14. Based on the current Super Retail share price of $10.50, that implies a possible upside of more than 33% in the next year.
