The Super Retail Group Ltd (ASX: SUL) share price is having a solid session on Wednesday.
In morning trade, the diversified retailer's shares are up 3.5% to $12.59.
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Why is the Super Retail share price charging higher?
The catalyst for this gain has been the release of the company's trading update this morning.
According to the release, Super Retail delivered solid sales growth during the first 16 weeks of FY 2024 despite the tough economic environment.
Super Retail reported a 4% increase in total group sales over the prior corresponding period, with like for like sales up 2%. This was driven by growth across the Supercheap Auto, Rebel, and BCF brands.
How did its brands perform?
The star of the show was the BCF brand, which reported total sales growth of 11% and like for like sales growth of 3% for the period. Super Retail CEO, Anthony Heraghty, commented:
Accelerating sales growth in BCF has been supported by contribution from new stores and increased demand in boating, fishing and water sports.
The next best performer was the Supercheap Auto business, reporting a 4% growth in total sales and like for like sales. This was driven by a resilient performance from the auto maintenance category. Heraghty said:
Supercheap Auto's performance has been driven by ongoing strength in the auto maintenance category, including higher lubricant sales following a successful best performing oils campaign.
The Rebel brand was a more modest performer, achieving total sales growth of 2% and flat like for like sales. The CEO explains:
Rebel rCX and new regional stores continue to perform well and its flagship store in Emporium, Melbourne is on schedule to open prior to Christmas. In addition, the new rebel active customer loyalty program will launch by the end of October.
Offsetting some of this growth was the Macpac brand, which posted a disappointing 7% decline in sales and an 8% reduction in like for like sales. However, the CEO highlights that the business was cycling some very strong sales growth from a year ago. He said:
Macpac is cycling 76 per cent like-for-like sales growth in the pcp. Sales in travel related categories (backpacks and luggage) are growing strongly, however unseasonably warm weather has affected sales of insulation and rainwear products.
What about earning?
While no earnings data was provided, management revealed that "group gross margin as a percentage of sales is modestly favourable to the prior comparative period despite the impact of weaker currency on cost of goods sold."
Speaking of which, the company continues to expect its cost of doing business as a percentage of sales to increase in FY 2024.
Overall, Heraghty appears cautiously optimistic on the future as the company heads into the most important trading period of the year. He said:
Super Retail Group's unique portfolio of retail brands with market-leading positions in growing lifestyle and leisure categories, large active club membership base and strong balance sheet mean the Group is well placed to deliver long-term value for our shareholders. As always, the Group's first half result will be highly dependent on trading in the peak Christmas holiday period.
