Super Retail Group thrives online as Australians embrace domestic travel

Super Retail Group thrives online as Australians embrace domestic travel

Super Retail Group's (ASX: SUL) omni-channel retail model enabled the company to ride out the worst of the initial COVID-19 market shock as online sales rose by 44.4 per cent in FY20.

However the company's net profit after tax was down by approximately 21 per cent in the financial year to $110.2 million.

The retailer is the parent of major brands including Supercheap Auto, outdoor and leisure retailers Macpac and BCF, as well as sporting retailer Rebel Sport.

As such, SUL says it benefited from "pent-up" demand for domestic travel, leisure and outdoor activities as many Australians emerged from COVID-19 lockdowns, eager to get outside.

This resulted in the company's fourth quarter sales in May and June rebounding by 27.2 per cent.

That positive momentum continued across all four brands in the first seven weeks of FY21, with sales growth of 32 per cent.

Group online sales increased by 44.4 per cent to $290 million, representing 10 per cent of total sales.

SUL's managing director and CEO Anthony Heraghty says the company's omni-channel approach and its response to the initial impact of COVID-19, including reallocating resources to its online businesses, enabled it to thrive in the last six months of FY20.

"The group's omni-channel retail strategy has enabled our business to adapt quickly to changing consumer behaviour during COVID-19 and delivered a strong trading performance," says Heraghty.

"Keeping stores open for our customers while successfully pivoting to meet increased demand in our online sales channels has enabled the Group to profitably navigate an extremely challenging period for retail and deliver 44 per cent annual online sales growth.

"We are well positioned to benefit from consumer trends emerging from the pandemic, including the channel shift to online, uptake in DIY auto repairs and household projects, increased focus on personal health and wellbeing, and greater demand for domestic travel and outdoor leisure activities."

During FY20 more than one million customers made their first online purchase with SUL.

Heraghty says ongoing investment in SUL's omni-channel capability is positioning the group well.

"This investment has supported 66 per cent CAGR in group online sales over the past four years," says Heraghty.

"During this period, the group's active membership base of 6.6 million has grown almost five-times faster than store numbers.

"Scalable growth is critical to our success and our ability to expand the group's customer base multiple times faster than our physical store network reinforces our conviction in an omni-retail strategy."

In the first seven weeks of FY21, SUL has witnessed "extremely robust" sales growth of 32 per cent, driven by an uptake of domestic tourism, exercise and fitness, and outdoor leisure activities.

Sales growth for the beginning of the new financial year was particularly pronounced at BCF, which has seen 72 per cent growth.

SUL says while the economic outlook is uncertain for the remainder of FY21, it expects capital expenditure to be approximately $90 million.

The company's board has declared a fully franked dividend of 19.5 cents per share, representing a payout ratio of 55 per cent of second half underlying NPAT.

Updated at 12:48pm AEST on 24 August 2020.

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