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Super Retail Group hit by lockdowns

Super Retail Group shares rose on Wednesday despite providing an update on its year-to-date trading performance, which outlined several issues due to extended COVID-19 lockdowns.

The company which owns brands including Supercheap Auto, Rebel, BCF and MACPAC, reported that year-to-date like for like sales performance across the group’s four core brands all fell by more than 10%, as COVID-19 lockdowns adversely impacted trade in the first 16 weeks. Macpac has been particularly impacted by lockdowns in the key markets of NSW, Victoria, ACT and New Zealand, which were more severe than the previous corresponding period.

However, online sales which represent 30% of group sales, increased by 96%. Click & Collect grew by 163%, outpacing home delivery, and represented 59% of online sales during this period. Gross margin improvements that were achieved in FY21 were also sustained in the first 16 weeks of FY22.

The company notes that it well positioned for the key cyber and Christmas trading period with a fortified inventory position across all four of its core brands, and it expects promotional activity to normalise over the period. However, freight and logistic costs associated with elevated levels of inventory could impact future gross margin as the outlook for supply chain remains challenging.

Super Retail also confirmed that is undertaking investment in its customer loyalty and data and analytics capability, with a multi-year program underway. The significant investment will impact operating expenses in the first half and beyond.

Anthony Heraghty, Group Managing Director and Chief Executive Officer, said: “The group’s omni-retail business model has proven to be resilient during the first half and we are delighted with the strong online sales growth we have delivered. In FY22 year to date, we have maintained steady trading momentum in non-COVID impacted regions and we are confident that we will see a rebound in sales as lockdowns end and stores re-open. The group has a strong inventory position and is well placed to take advantage of the expected uplift in consumer demand in the auto, leisure and outdoor categories over the summer holiday period.”

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