The Super Retail Group Ltd (ASX: SUL) share price fell more than 10% after announcing a FY26 trading update.
Super Retail Group is the parent retail business of Supercheap Auto, Rebel, BCF and Macpac.
FY26 trading update
The company revealed that its sales growth has slowed in the second half of FY26 compared to the earlier part of the financial year.
Super Retail revealed how it performed up until week 44 of FY26.
Total sales growth for weeks 27 to 44 was the following:
- Supercheap Auto sales grew 3% with like-for-like (LFL) sales growth of 1.6%
- Rebel sales grew 2.8% with LFL growth of 1.4%
- BCF sales declined 1.2% with LFL sales declining 3.3%
- Macpac sales grew 2.9% with LFL growth of 2.5%
- Group sales increased 1.9% with LFL growth of 0.4%
After this period, total sales growth across the business for FY26 to week 44 was 3.3%, with 4.3% growth for Supercheap Auto, 4% growth for Rebel, a 0.3% decline for BCF and 8.9% growth for Macpac.
The business reported that sales momentum across all four brands was adversely affected by the onset of the Middle East conflict.
Those setbacks include inflationary pressures, including higher fuel prices and rising interest rates, as well as concerns around fuel availability weighing on consumer sentiment, with the impact being felt the strongest over the key Easter trading period.
Super Retail noted that its group gross profit margin in the second half of FY26 to date is “modestly below” the prior corresponding period.
However, pleasingly, the company said that Supercheap Auto increased its market share of the auto market over the March quarter, while Rebel also gained market share.
What happened to BCF?
The retail company said that BCF is the brand most impacted by elevated fuel prices and fuel supply constraints, particularly in regional areas, resulting in reduced outdoor activities over the Easter holidays.
Macpac also suffered from a reduction in outdoor activity over March and April. It has focused on managing inventory and ranging as it prepares for the peak winter trade in the fourth quarter.
Balance sheet and costs
The ASX retail share said that it has strategically invested approximately $30 million in additional working capital aimed to secure inventory ahead of pending price increases, particularly in the Supercheap Auto business.
It also noted that it expects to incur duplicated operating expenses and project costs associated with transitioning from existing distribution centre facilities to the group’s new Victorian distribution centre, as well as costs related to implementing a new HR core and payroll system.
Total group and unallocated costs in FY26 are expected to be $66 million, up from $60 million. This includes the early start of projects previously targeted for FY27.
Final thoughts on the Super Retail share price
While it sank more than 10% at the open, it’s now only down by 4%. Even so, it’s still down by around 30% in the last six months.
Things are clearly not looking promising in the near future, but that’s why the retail business could be a good medium-term buy today. I think it’d be better to buy a cyclical retail when there’s pessimism rather than booming sales. But, it could take a year or two for consumer confidence to return.
I’d also suggest it could be one of the ASX dividend shares to keep an eye on.
