Super Retail Group Ltd (ASX: SUL) shares have come flying out of the gates on Monday and raced to an all-time high.
At the time of writing, the retail group's shares are up 7% to $16.90.
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Why are Super Retail shares racing higher?
Investors have been fighting to get hold of the company's shares today after it released a trading update for the first half of FY 2024.
As you might have guessed from the way the market is reacting, Super Retail had a strong six months.
According to the release, for the six months ended 31 December, the Supercheap Auto and Rebel owner's unaudited revenue came in at a record of $2.02 billion.
Super Retail's CEO, Anthony Heraghty, revealed that the company had a very successful holiday period. He commented:
The Group has traded well over the cyber sales and Christmas holiday trading period. We maintained positive like-for-like sales growth in the first half, however cost of living pressures on the consumer did lead to a more constrained retail trading environment at the end of the second quarter.
Despite this, our customer proposition and the resilience of the lifestyle and leisure categories in which we operate underpin our performance in challenging economic conditions where consumers are sharpening their focus on value.
Things won't be quite as positive for its profits, which are expected to fall slightly year on year due to a higher cost of doing business (CODB).
Management expects its profit before tax (PBT) to be between $200 million and $203 million for the period. This is down from $218 million during the prior corresponding period but well ahead of consensus estimates. Heraghty commented:
Gross margin (%) in H1 FY24 is expected to be higher than H1 FY23, however cost of doing business (CODB) as a percentage of sales has increased as a result of the impact of inflation on wages, rent and electricity. Higher CODB has impacted rebel in particular, given the composition of its lease portfolio and its higher team member-to-store ratio.
Super Retail will be releasing its unaudited results next month.
How does this compare to expectations?
Goldman Sachs has responded to the update and was pleased with what it saw. Particularly in respect to its earnings, which were notably higher than expectations. It said:
The company announced their preliminary 1H24 group revenue of A$2.02B (+3% YoY, in-line with GS A$2.0bn) and PBT of A$200-203mn (-8% YoY, +13% vs GSe A$178mn and +17% vs Visible Alpha Consensus A$172mn), with a strong beat at Supercheap Auto and BCF as key highlights.
Super Retail shares are now up 37% over the last 12 months.
