Super Retail Group Reports 3.1% Like-for-Like Growth, Opens New DC

Omni-Retail Model Driving Growth

Super Retail Group (ASX: SUL) has reinforced its position as a leading omni-retailer across Australia and New Zealand, boasting a network of over 774 stores. At the recent Macquarie Australia Conference, CEO Anthony Heraghty highlighted the Group’s efficient omni-retail model, which blends physical stores with digital channels to meet evolving consumer preferences. This approach has enabled the Group to maintain strong cash generation and deliver steady sales growth despite subdued retail conditions in some markets.

Key to this strategy is the Group’s focus on expanding and optimising its store footprint. Since pre-COVID-19, the network has grown by 10%, with ongoing refurbishments and relocations enhancing store formats. The Group’s flagship brands, Supercheap Auto, rebel, BCF, and Macpac, continue to lead their categories, supported by a loyal customer base of 12 million active club members, representing 79% of sales.

Supply Chain Transformation with New Distribution Centre

A major highlight is the completion of the new semi-automated distribution centre (DC) in Truganina, Victoria, which is set for phased opening starting in the second half of FY25. This facility will consolidate the Group’s existing Victorian DCs, delivering significant efficiencies in operating expenses and third-party logistics costs. Enhanced online fulfilment capabilities and working capital savings are also expected, positioning the Group to better serve its omni-channel customers.

The commissioning plan has been carefully designed to minimise operational risks during peak trading periods, reflecting the Group’s disciplined approach to capital allocation and operational excellence.

Trading Update and Brand Performance

Trading momentum improved in H2 FY25 with a 3.1% like-for-like sales growth, up from 1.8% in H1. This was largely driven by strong performances from BCF and rebel, despite challenges such as subdued conditions in New Zealand impacting Macpac and a $5 million sales headwind from cyclone Alfred affecting rebel. Supercheap Auto’s sales remained steady, with a strategic shift away from low-margin promotions helping to maintain competitiveness.

Gross margins in H2 are tracking below the prior comparable period, consistent with the year-on-year decline seen in H1, reflecting ongoing cost pressures and market dynamics.

Cost Management and Future Investments

The Group is managing increased costs related to a major payroll system replacement and the transition to the new distribution centre. Group and Unallocated costs for FY25 are expected to reach $42 million, up from $36 million in FY24, with further duplication costs anticipated in FY26. Despite these near-term cost headwinds, the Group remains focused on disciplined capital allocation, targeting returns well above its cost of capital through network expansion and digital capability enhancements.

Looking ahead, Super Retail Group plans to continue investing in store network growth, including new builds and refurbishments, while leveraging its strong customer loyalty data to personalise offers and drive sales. The omni-retail strategy, combined with supply chain improvements, positions the Group well to navigate a competitive retail landscape.