Super Retail Group Halts Trading, Raises Capital | KOSEC

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Super Retail Group Halts Trading, Raises Capital

Caroline Wong

Caroline Wong is a Research Analyst at KOSEC - Kodari Securities. She writes on markets and focuses on ASX Top 300 companies. Email Caroline at c.wong@kosec.com.au.

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Australian retailer, Super Retail Group, has today entered a trading halt. In its trading update, poor performance in April has now witnessed a gradual rebound. This is evident in the 26.2 per cent decline in the group’s like-for-like (LFL) sales in April, which made a sharp turnaround in May. More importantly, this is attributed to a quick and successful transition to capture the online market. Specifically, the group’s online sales jumped 126.2 per cent, relative to the 18.2 per cent of group sales over in the nine weeks from 29 March.

In terms of segment’s performance, gains were led by Supercheap Auto. Trading for the automotive parts company was affected in April as 45 of its 326 stores were closed due to the restrictions put in place by the New Zealand Government. Yet, a gradual recovery was seen after Anzac Day because of fiscal stimulus and easing of restrictions. LFL sales growth from the period of weeks 39-47 surged 3.7 per cent with a general trend towards essential products. Additionally, Supercheap Auto noted an emerging consumer trend of spending being directed towards higher value and lower-margin products.

Meanwhile, sports retailer, Rebel, has managed to emerge out of the pandemic swiftly. The reduced traffic in the city and shopping centres during April and May hit the business hard. However, the pandemic has also witnessed an increase in sales towards fitness and hard goods fuelled by a rise in home fitness activity. Yet, sales shifted back to apparel and footwear in May. This is evident in the period of 29 March till 23 May 2020, where online sales came in at $40.2 million, reflecting a 176 per cent increase relative to the prior corresponding period (PCP). More notably, the remarkable performance also constitutes close to 30 per cent of group’s sales.

During the same period, BCF (Boating, Camping and Fishing) were impacted by restrictions imposed by the state government. However, with the gradual easing of restrictions, there has been a significant increase in camping and fishing products as online sales surged 89 per cent relative to PCP, constituting 12 per cent of group’s sales. Finally, clothing retail company, Macpac took a greater hit as its stores in New Zealand were shut for close to 8 weeks. Additionally, trading in Australia was affected as a result of the decline in foot traffic. Nevertheless, sales in the nine weeks soared 149 per cent relative to PCP, contributing to 49 per cent of group’s sales.

Collectively, the segments’ performance point to the fact that the retailer is on its road to a steady recovery and all core four brands are poised to benefit from the emerging consumer trends. Nevertheless, the group has announced that it will be raising $203 million to qualified shareholders at a fixed price of $7.19 per security. Funds raised will enable Super Retail to continue executing its strategy and provide additional flexibility in an uncertain environment.

By Caroline Wong 

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