Super Retail Group Ltd (ASX: SUL) has reported a resilient FY20 result today. It sent the Super Retail share price up more than 1%.
Super Retail FY20 result
Total sales rose by 4.2% to $2.8 billion. Group like for like sales rose by 3.6% and online sales rose by 44.4% to $290.5 million.
Overall segment EBITDA (click here to learn what EBITDA means) went up by 4.3% to $328.1 million. Group EBIT rose by 3.5% to $236.1 million.
Now let’s look at the individual business segments. Supercheap Auto grew sales by 7.6% with like for like sales growth of 6.3%. Sales rebounded in the final quarter. EBITDA went up 11.9% to $174.7 million and EBIT grew 11.9% to $134.9 million. Supercheap Auto opened four stores and closed one store.
Rebel sales rose by 3.3% to $1.04 billion. EBITDA rose 3.3% to $126.6 million and EBIT grew 3% to $96.6 million. Rebel closed one store over FY20.
BCF sales went up 4% to $535 million. EBITDA declined due to competitive intensity to $34.9 million and EBIT dropped to $15.7 million. BCF opened four stores and closed one store during FY20.
Macpac sales fell by 5% to $131.9 million. EBIT decreased to $7.2 million. However, Macpac club membership rose 10% to 0.45 million. Macpac opened three stores and closed on store during the year.
COVID-19 impacts
Most stores continued to trade during the COVID-19 impacted months earlier in 2020. The company cancelled its interim dividend of $42.5 million and secured an additional $100 million funding with a debt facility.
I like that the company made payments of between $250 to $1,000 to permanent, frontline team members for their efforts.
Cashflow, net debt and dividend
Operating cashflow improved by $164 million during the year driven by a lower net inventory investment, lease payment deferrals and a shift in tax payments. These benefits are expected to reverse in the next financial year.
Excluding lease liabilities, its net cash position was $37.3 million was a $424 million improvement compared to the prior year. All borrowings were repaid in July 2020 and the $100 million ANZ bilateral facility was cancelled in August 2020.
The board declared a fully franked final dividend of 19.5 cents per share, representing 55% of second half underlying net profit after tax.
Outlook
In the first seven weeks of FY21 the company has seen total revenue growth of 32%, with 72% growth at BCF being the highlight.
There has been an increased uptake of domestic tourism and travel, exercise and fitness and outdoor leisure with a better gross margin compared to the prior corresponding period in FY20.
This was a solid FY20 result. However, I think there’s a question mark about whether retail businesses can maintain this growth once government support ends. For that reason, I’m not sure if Super Retail is worth buying today.
There are other ASX growth shares I would rather buy. For retail related, something like Lovisa Holdings Ltd (ASX: LOV) and City Chic Collective Ltd (ASX: CCX) could be better long term buys. Otherwise, a pick like Pushpay Holdings Ltd (ASX: PPH) could be a good pick too.
