Shares of Super Retail Group Limited (ASX: SUL) – the owner of Rebel Sports, Supercheap Auto, Ray's Outdoors and more – climbed 1.4% today upon the release of its annual report.
In the 52-week period to 27 June 2015, Super Retail reported a 25% fall in net profit to $108.1 million on revenue growth of 7.1%. This result was largely expected by the market which is evident from the share price rise.
Despite the profit fall there were a few green shoots emerging from the report including like-for-like sales growth and solid performances from Rebel, Amart Sports and Supercheap Auto.
However, the reporting period wasn't all smooth sailing for the company with the Ray's Outdoors, Workout World and the FCO Fishing Camping Outdoors businesses presenting challenges for management.
Pleasingly, management forecast the group to achieve overall sales within key markets despite "patchy" consumer confidence. Increased market share across all businesses and the rollout of between 20 and 30 stores will build out the future growth programs.
"We expect that Group EBIT margin will improve as a result of improvements in gross margin and a reduction in the operating costs incurred on the Group's strategic programs," CEO Peter Birtles said.
"The new financial year has started in line with our expectations," Mr Birtles added. "In the first seven weeks, Group like for like sales are tracking at around 4% ahead of the prior year and overall gross margin is tracking above the prior comparative period."
Is Super Retail's dividend too good to ignore?
Another promising sign for patient shareholders, who watched on as their company's share price dropped 44% in the 2014 calendar year, was the announcement of the 21.5 cents per share fully franked final dividend.
The final payout takes the full year dividend to 40 cents which is in-line with last year and ahead of expectations of 37 cents per share. Even after today's modest share price rise, the payout places Super Retail's shares on a fully franked dividend yield of 4%.
In my opinion, that's an impressive dividend yield in the current low-interest rate environment. Moreover, if management can deliver on their outlook the shares could look cheap at today's prices in a couple of years' time.
However, personally, Super Retail is one stock I'm leaving on my watchlist for the foreseeable future since I believe consumer confidence is likely to remain subdued for some time.
