It's shaping up to be another horror day for the S&P/aSX 200 Index (ASX: XJO) and many ASX shares this Thursday. At the time of writing, the ASX 200 has crashed 1.55% lower and is back to around 8,290 points. But let's talk about what's happening with Super Retail Group Ltd (ASX: SUL) shares.
While the broader market is having a bad day, it's been a shocker for Super Retail shares. This ASX 200 retail stock and owner of the Supercheap Auto and BCF chains closed at $16.19 a share yesterday.
But this morning, those same shares opened at $14.85 and are currently down to just $14.95 each. That's a fall worth a nasty 13.3%.
This drop comes after Super Retail dropped its latest earnings report this morning, covering the half-year to 28 December.
Image source: Getty Images
Super Retail shares plummet after 10% drop in profits
Here's a summary of what Super Retail had to show investors this morning:
- Total sales of $2.11 billion, a rise of 4% over the same period in 2023
- Total earnings before interest, tax, depreciation and amortisation (EBITDA) of $393.2 million, a 2.2% fall over the prior period
- Normalised net profit after tax (NPAT) of $130.8 million, down 9.9%
- Gross margin of 45.6%, down from 46.3% in the prior period
- Normalised earnings per share (EPS) of 57.9 cents, down 10%
- Interim dividend of 32 cents per share, fully franked, declared
What happened during the half?
In terms of raw sales revenue, Super Retail had a strong half. All four of the company's primary brands (Supercheap, BCF, Rebel, and Macpac) achieved sales growth over the six-month period.
However, inventories and costs also rose over the half.
Super Retail had $902.2 million worth of inventory on its books as of 31 December 2023. However, one year later, this had expanded to $970.7 million.
Super Retail's cost of doing business (CODB) as a percentage of sales also rose, from 35.2% in 2023 to 35.5% in the last half. That helped lower the company's group margin from 10.2% to 8.8%.
Meanwhile, the next interim dividend that Super Retail shares will pay, worth a fully franked 32 cents per share, matches last year's interim dividend. However, it falls behind the final dividend of 37 cents per share that investors enjoyed last October. Unlike that payment, there will be no special dividend accompanying it either.
What did management say?
Here's some of what Super Retail CEO Anthony Heraghty had to say on these results:
Super Retail Group delivered solid first half sales growth of four per cent – a pleasing outcome considering the challenging consumer conditions throughout the period, especially in New Zealand…
Ongoing inflationary pressures on the cost of doing business have impacted PBT growth and margins in the period. While some of those pressures may be easing, we remain focused on actively managing our cost base in this environment.
Outlook for Super Retail shares
Super Retail also gave investors an update as to how its second half is tracking. The company revealed that like-for-like group sales over the first seven weeks of the calendar year are up 5% over the same period last year. These range from 0% growth for Supercheap Auto to 11% growth at BCF.
Heraghty commented, "We are pleased with the start to the second half of FY25, with like-for-like growth of 5 per cent and improved gross margins, highlighting the benefit of operating a portfolio of brands".
Although Super Retail intends to open an additional 28 stores across FY2025, the company warned investors that it "expects continued upward pressure on its cost base in FY25", despite easing inflation.
With today's sizeable share price drop, Super Retail shares are now sitting on a 17.2% loss for the past 12 months.
