Super Retail Group (ASX: SUL), known for its Supercheap Auto and BCF outdoors and camping stores, earlier in November announced that it would acquire the exercise and fitness equipment company Workout World.
The business was to have 21 stores after the acquisition, and Super Retail Group would become owner of the brand name, intellectual property and assets including inventory. It sees the potential of the brand, and it will complement its own sports and leisure segment, which includes Rebel Sports and Amart Sports. The business has some franchises, but the company doesn't plan to take on the franchise business arm.
The amount of the acquisition was not disclosed, but the company said it wasn't material and the contribution of the business is not expected to have a material impact on earnings in the short term.
As for its existing sports and leisure division, the company is now planning to introduce Rebel Sports stores in a smaller format to shopping centres to expand its presence. The sports store is usually set up in a large format to have everything available to customers, but this move will put it in front of mall shoppers, and give them easy access to a sports brand that many people already know.
The sports division is now almost generating the same revenue as the company's mainstay Supercheap Auto, $704 million vs $790 million, respectively, in 2013.
When I spoke with the CEO and managing director Peter Birtles last month at the company's Queensland headquarters, he explained that Rebel Sports stores would be introduced into shopping malls in population centres, and that the Amart Sports stores would focus on supplying the needs of customers in suburb and regional areas.
Foolish takeaway
These instances of business changes are great examples of why investors need to keep up to date about the companies that they own. With new acquisitions come opportunities and challenges. The company will have to integrate the purchase into its existing business, but having both sports and fitness equipment can be a great pair. The acquired stores could also be fit out to complement one of its other store brands.
With the expansion plans into shopping malls, you can go visit them yourself, and see how well they are performing. It's the easiest way to do company research, and you might even pick up something for yourself while you're there. Watch how busy the store gets, and what people are buying. If they like the products, then you are likely going to love the stock.
Super Retail Group's share price is up about 8% since June 30, and the S&P/ASX 200 Index (ASX: XJO) is up 10.1% over the same period.
