The Super Retail Group Ltd (ASX: SUL) share price is up after the retailer revealed its FY22 sales update.
There are four key businesses within Super Retail: Supercheap Auto, Rebel, BCF and Macpac.
Super Retail’s FY22 sales so far
In the first 16 weeks of FY22, the company has seen declines across the board compared to FY21.
Supercheap Auto sales were down 13%, though up 5% compared to the first 16 weeks of FY20.
Rebel sales are down 10% in FY22 so far, though up 4% compared to FY20.
BCF sales were down 12%. But compared to FY20, were a huge 38% higher.
Macpac sales were down 10% compared to both FY21 and FY20.
In total Super Retail’s total sales were down 12% compared to FY21, but up 10% compared to FY20.
What’s going on?
Super Retail said that COVID-19 lockdowns have hurt sales in the first 16 weeks. Macpac has been particularly impacted in places like NSW, Victoria and Auckland.
Excluding the major impacted markets of NSW and Victoria, group like for like sales in the first 16 weeks of FY22 were 6% lower than FY21 and 27% higher than FY20.
But whilst store sales were being heavily impacted, online sales increased 96% and represented 30% of total sales in the year to date. Click and collect sales were up 163%, growing faster than home delivery, representing 59% of online sales.
Turning to the gross profit margin, the improvement that was seen in FY21 has been sustained in the first 16 weeks of FY22.
Other comments
Super Retail said that the group is well positioned for the key e-commerce and Christmas trading period with a “fortified” inventory position across all four of its core brands. However, the company is expecting that promotional activity will normalise in this period. That probably means more discounting to get sales.
Freight and logistic costs associated with elevated levels of inventory “could impact future gross margin”. It said that the outlook for the supply chain remains challenging.
Super Retail also referred to its multi-year program where it’s investing in customer loyalty, data and analytics capability. This is going to impact operating expenses in the first half of FY22 and beyond. Apart from that, operating expenses as a percentage of sales have normalised compared to the first half of FY20.
Final thoughts on the Super Retail share price
Whilst Super Retail has risen strongly since the bottom of the COVID-19 crash, it has only gone up around 9% over the last year.
The company is still generating solid sales. The retail environment isn’t going to remain as strong as FY21. But it can continue to grow online sales and enlarge its stores network to increase profit and the margins, benefiting from scale.
