Super Retail Group Ltd reports tomorrow: Here's what every investor needs to know

BCF, owned by Super Retail Group Ltd (ASX:SUL), is struggling but could be the key to a turnaround this earnings season.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Australia and New Zealand-based leisure and retail company Super Retail Group Ltd (ASX: SUL) is due to report its financial performance for the 6 months to 31 December on 19 February.

The group currently operates approximately 650 Amart Sports, BCF, Avanti Fitness, Goldcross Cycles, FCO (Fishing Camping Outdoors), Ray's Outdoors, Rebel, Supercheap Auto and Workout World stores, but disappointed investors in October 2014 with a subdued trading update.

Tough Conditions

Super Retail, like many of its discretionary retail counterparts, has struggled in recent times as consumer confidence and spending stalled in the face of the unstable Australian political environment and negative reporting of the state of the Australian economy.

The company's trading update in October reported that the first four months of the financial year had seen auto segment like-for-like sales increase by 4% while sports increased by 3%. Unfortunately however, like-for-like leisure segment sales (35% of revenue) decreased by 8% and cost pressure saw gross margins decrease compared to the previous period.

Despite the group announcing the opening of 28 new stores in the 2015 financial year, which ends on 30 June 2015, analysts cut their net profit forecasts for the year by between 5% and 15%.

The Numbers

For the full 2015 financial year, Australia's major analysts expect Super Retail to generate around $110 million net profit after tax, earnings per share of around 55 cents, and pay a dividend of 40 cents. At the current price of $8.60, this would represent a dividend yield of 4.7%, grossed up to 6.6% with 100% franking.

Dividend Surprise?

Following the disappointing earnings results from competitors in the discretionary retail space, including Kathmandu Holdings Ltd (ASX: KMD) and OrotonGroup Limited (ASX: ORL), I would be very weary of holding a large portion of my portfolio in Super Retail stock for the dividend. While some upside is possible, analysts don't appear convinced that weakness in the group's leisure segment will pass any time soon.

Motley Fool contributor Andrew Mudie does not own shares in any companies mentioned. You can find Andrew on Twitter @andrewmudie

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »