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Results: Super Retail share price higher as profits lift 7%

Kenneth Hall
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The Super Retail Group Ltd  (ASX: SUL) share price has climbed higher despite billions being wiped off the S&P/ASX200 Index (INDEXASX: XJO) this morning after reporting a 7% increase in net profit.

What did Super Retail report this morning?

The company total sales surged 5.4% higher on the prior corresponding period (pcp) to $2.71 billion with Group LFL sales growth of 2.9%.

Super Retail defied the broader softening in Aussie retail data to post earnings before interest, tax, depreciation and amortisation (EBITDA) up 7.0% on pcp to $314.7 million in the full-year result.

Positively for investors, normalised net profit after tax (NPAT) climbed 5.0% on pcp to $152.5 million while the Super Retail final, fully-franked dividend climbed to 50.0 cps, up 1.0 cps in 1H18.

Super Retail reported 6.1 million active club members across its Rebel (2.57 million), Supercheap Auto (1.65 million), BCF (1.45 million) and MacPac (0.41 million) brands.

The company’s retail sales numbers remain heavily bricks-and-mortar-based, with between 90% and 94% of all sales across its 4 major brands coming from in-store sales, while 40% of online sales are through its Click & Collect service.

MacPac showed the strongest individual total sales growth, rocketing 70.3% compared to 3.3% to 3.8% for the other three segments.

Despite the strong physical store presence, online sales growth rocketed 25% across the group’s brands which may be an indication of a further digital transition for Super Retail.

The company lowered its net debt by $422.9 million in 1H18 to $386.7 million in its latest results, while profit attributable to owners climbed 8.6% to $139.3 million.

Foolish takeaway

While much of the data out of the Aussie retailers have shown warning signs of a downturn in the retail sector, we haven’t seen those numbers flow through to Super Retail’s full-year results this morning.

However, underlying this morning’s solid result was the caveat that the group expects to see additional costs for underpayment of its store managers in recent years.

Super Retail recorded an $8.9 million before-tax expense relating to the wage repayments, with a forecast $9 million impact on its full-year EBITDA from the new enterprise bargaining agreement in the retail sector.

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019