The Super Retail Group Ltd (ASX: SUL) share price is under the spotlight after the company gave a FY25 trading update.
Super Retail owns a number of retailers including Supercheap Auto, Rebel, BCF and Macpac.
FY25 trading update
The retailer reported at its annual general meeting (AGM) how it had performed for the first 16 weeks of the 2025 financial year.
The ASX share revealed Supercheap Auto achieved like-for-like (LFL) sales growth of 2% and total sales growth of 4%. The company said its performance has been driven by the auto maintenance category, including lubricants. Sales have slowed in New Zealand, and competition has increased, requiring more promotional activity. It noted its new Supercheap Auto loyalty program is expected to “drive stronger share of wallet”, with a “modest” negative impact to the gross profit margin.
Rebel LFL sales growth was 1% and total sales growth was 2%. It delivered growth in the footwear and apparel categories. Additional clearance activity has been done to prepare for peak trade and improve its seasonal inventory position. The Rebel loyalty program has “performed well” since launch in October 2023, with all key metrics ahead of the business case. However, redemptions within the Rebel program have reduced the gross profit margin by around 140 basis points (1.40%) in the current period.
BCF LFL sales growth was 3% and total sales growth was 6%. Growth has continued in fishing, caravan and 4WD thanks to range expansion initiatives.
Macpac LFL sales growth was 4% and total sales growth was 10%. Macpac saw sales growth with insulation, rainwear and packs, though there has been challenging trading conditions in New Zealand.
Super Retail’s overall LFL sales growth was 2% and total sales growth was 4%. Sales growth is normally a supportive factor for the Super Retail share price.
Costs
The company reminded investors it expects duplicated operating expenses due to the transition from the existing distribution centre facilities to its new Victoria distribution centre. This will lead to a one-off increase in costs of $8 million.
For FY25, it’s targeting capital expenditure of $165 million to fund its store development program, the new distribution centre, enhancements of its customer loyalty programs, cyber capabilities and e-commerce capabilities.
Super Retail said that inflation appears to be gradually easing, but it’s expecting continued upward pressure on its case base in FY25.
Final thoughts on the Super Retail share price
The company said the consumer outlook “remains uncertain” because of cost-of-living pressures on household budgets. But, Super Retail said it remains “well positioned” to perform where customers are carefully managing their spending and prioritising value-for-money purchases.
Unless the Super Retail share price falls significantly, I don’t think this is the right time to invest. I prefer to look at retailers when the valuation reflects a lot of negativity about the situation, which doesn’t seem to be the case at the pre-open price.
There are other (retail) ASX growth shares I’d rather buy first.
