Super Retail Group margins steady, BCF struggles

Supercheap AutoSuper Retail Group has said it expects to hold full year group earnings margins in line with last year after experiencing a mixed start to 2018, with sales growth from Supercheap Auto and Rebel offsetting negative like-for-like sales (LFL) at leisure brand BCF.

In a trading update on Thursday morning group managing director and chief executive Peter Birtles said the $135 million acquisition of leisure retailer Macpac would contribute around $5 million to full year group earnings and that $17 million in associated restructuring costs would be booked.

“We continue to expect that we will hold full year group EBIT margin in line with the prior comparative period before recognising the contribution from the recently acquired Macpac business,” Birtles said.

Super Retail Group (SUL)’s share price shot up 7.46 per cent to $7.49 in early Thursday trading.

Birtles said on Thusday that the BCF brand had continued to be impacted by adverse weather conditions in Queensland, booking a .4 per cent decline in LFL sales for the 17 weeks ended 28 April.

BCF’s LFL sales were up circa 2 per cent in the first seven weeks of the second half, but trading appears to have worsened in Queensland during February and March, with LFL sales down 4.5 per cent.

The leisure retailer’s financial year to 28 April sales are up 3.7 per cent, down on the 5.5 per cent increase booked for the first half, while full year earnings before interest and tax (EBIT) margins are tracking 1 per cent below last year heading into the fourth quarter.

There were 136 BCF stores as at 28 April, unchanged from 30 December.

Supercheap Auto appears to have performed better in the 17 weeks to 28 April, with LFL sales up 4.4 per cent, leaving the business on track to hold its EBIT margins in line with the prior comparative period’s 11.6 per cent.

“Supercheap Auto continues to perform strongly benefiting from its focus on customer experience, digital engagement and extension of services,” Birtles said.

Financial year to 28 April sales were up 6 per cent, an acceleration on the 5.6 per cent growth recorded at the half, while LFL sales are up 3.9 per cent.

There were 319 Supercheap Auto stores as at 28 April, down from 321 at the end of the first half.

Rebel, which recently incorporated Amart Sports, has seen sales momentum build, with LFLs up by 2.2 per cent in the 17 weeks to 28 April.

The business is tracking .1 per cent below last year’s EBIT margin of 9.6 per cent.

The sports brand’s financial year to 28 April sales were up 3 per cent, slightly ahead of the 2.7 per cent increase booked at the half, while LFL sales were up 1.5 per cent.

“Rebel is building momentum as it integrated the former Amart Sports stores and optimises the ranging and inventory across all stores,” Birtles said. “The business remains on track to deliver the synergy benefits from integrating the Amart Sports business into Rebel in the 2019 financial year.

10 Rebel stores closed in the period, including eight rebel fit stores (which are now stores within stores), bringing Rebel’s footprint to 158 locations.

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