SHAKY consumer confidence and softer retail conditions didn’t stop Super Retail Group (SUL) posting a 60 per cent increase in NPAT to $24.9 million in the December half.
Managing director Peter Birtles (pictured) says the results are a testament to the resilience of the Supercheap Auto and BCF Boating Camping Fishing businesses and the benefits of continued investment in store development, range, trade partnerships, supply chain and team member development.
“These results build on the strong momentum we’ve established throughout the group and reflect the strength of our business model,” says Birtles.
“We’re particularly pleased with the positive outcomes we’ve achieved from our investment in strategic initiatives over the past five years, which are evidenced in these results.
“During the period, we’ve successfully managed to maintain sales growth while also investing in our store network and delivering improvements in our business operations – this progress has provided a solid platform for the continued growth of our group.”
Birtles says the BCF component, is performing well despite it posting a loss in its first year.
“We’ve been happy with the performance of the BCF since it was launched in October 2005. In its first year, that business incurred a loss, but that was due to the cost of the investment in launching the business and was in line with our plan,” he says.
“At around the same time, we made some changes to our Supercheap Auto business including changing the branding and advertising tag line, store refurbishments, greater investment in product quality and development of our own brand products. These changes have allowed Supercheap Auto to deliver strong sales and profit growth over the past five years – significantly ahead of the general retail market.”
The company’s poor performing Goldcross Cycles acquisition will be downsized.
“It’s still early days yet, but we’re hoping that changes including downsizing our larger stores, developing our own brand products, investing in marketing, establishing a loyalty program and team training will generate sales and profit improvement,” says Birtles.
The company acquired Ray’s Outdoors – a broad camping and leisure offering with a network of 38 stores operating in five states for $53 million in June of last year. The business has a number of privately branded product ranges including Wild Country, Outdoor Expedition and Classic Outdoor, which is specifically designed for Australian conditions.
“Ray’s Outdoors will be merged with the BCF business to create a market leading Australian outdoor leisure retailer with two distinct brands, operating 103 stores with combined annualised sales of approximately $400 million,” says Birtles.
“Over time, we believe there is capacity to grow the network to 160 stores across Australia and New Zealand with approximately $600 million of sales.”
Birtles says BCF and Ray’s Outdoors are ‘highly complementary’ brands to the company’s core motoring and spare parts retail business.
“BCF provides a deep destination style offering for the outdoor enthusiast, while Ray’s Outdoors provides a broad outdoor leisure and lifestyle offering for a wider range of consumers,” he says.
“Ray’s Outdoors will extend our offering into a number of new categories including apparel and outdoor furniture.
“We expect to provide the capital and expertise to accelerate Ray’s Outdoors’ growth and store roll out and anticipate a range of synergies with the broader company including in procurement, supply chain, marketing and operations management.”
Ray’s Outdoors is expected to deliver the company $130 million in sales in FY11 and $2 million of additional synergies to the broader company in FY12.
Top Companies 2011: Super Retail Group
Ceo: Peter Birtles
Market Cap: $882 million
Revenue ’10: $938.6 million
Profit ’10: $38 million
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