Super Retail share price rockets after surprisingly strong FY 2020 performance // Motley Fool Australia

Super Retail share price rockets after surprisingly strong FY 2020 performance // Motley Fool Australia

In morning trade on Friday the Super Retail Group Ltd (ASX: SUL) share price is storming higher. This follows the release of an update on its expectations for FY 2020.

At the time of writing the retailer’s shares are up 12% to $9.07.

How did Super Retail perform in FY 2020?

Super Retail revealed that its sales rebounded strongly during final quarter following the easing of COVID-19 restrictions.

Following a 26.2% decline in monthly like-for-like sales in April, monthly like-for-like sales increased by 26.5% in May. Pleasingly, this positive trading momentum continued in June with an increase in monthly like-for-like sales of 27.7% compared to the prior corresponding period.

As a result, Super Retail recorded like-for-like sales growth of 3.6% and total sales growth of 4.2% in FY 2020. Total revenue is expected to be approximately $2.82 billion.

What were the drivers of its sales growth?

The Supercheap Auto business was the star of the show in FY 2020. It recorded a 6.3% increase in like-for-like sales and a 7.6% jump in total sales.

This was supported by its Rebel business, which delivered like-for-like sales growth of 2.7% and a 3.3% increase in total sales.

Also performing positively was the BCF business. It delivered 3% like-for-like sales growth and a 4% lift in total sales.

Management advised that these businesses benefited from a significant uplift in domestic tourism and travel, personal fitness, and outdoor leisure activities.

However, not all of Super Retail’s businesses performed as positively. The Macpac business was out of form and recorded a 9.1% decline in like-for-like sales and a 5% reduction in total sales.

What about its earnings?

Super Retail expects its pro forma segment earnings before interest, tax, depreciation, and amortisation (EBITDA) to be between $327 million and $328 million in FY 2020. This compares to FY 2019’s segment EBITDA of $315 million.

Whereas pro forma segment earnings before interest and tax (EBIT) is expected to be between $235 million and $236 million. This will be an increase from $228 million in FY 2019.

And on the bottom line, pro forma normalised net profit after tax is expected to be between $153 million and $154 million. This compares to FY 2019’s net profit after tax of $153 million.

Management advised that these pro forma figures exclude one-off pre-tax abnormal items of approximately $54 million. These items include the remediation of team member underpayments, the exit of certain non-core businesses, support office restructure costs, and the accelerated write down of certain assets.

Super Retail Group CEO and Managing Director Anthony Heraghty said: “Given the volatile trading environment, we are very pleased with these results.”

“The Group’s omni-retail channel business strategy has enabled our businesses to adapt quickly to changing consumer behaviour during COVID-19 and delivered a resilient trading performance. We look forward to updating the market with further detail on our 2019/20 financial results at our full year results presentation,” he concluded.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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