Super Retail Group, the parent company of apparel and lifestyle brands Rebel and Macpac, has recorded a 3 per cent lift in sales to a record $2 billion for the first half to FY24.
The record revenue is despite a 1 per cent fall in sales at Rebel, which hit $673 million, with Macpac sales up 4 per cent to $105 million.
Rebel’s drop in sales for the first half of FY24 has then continued into the second half, with its like-for-like (LFL) sales for the first six weeks of the new year down 4 per cent.
Rebel is reportedly cycling elevated sales in the prior corresponding period from the New South Wales back-to-school voucher program. Super Retail Group added that men’s and women’s apparel sales returned to growth in January, however footwear remains challenging.
Meanwhile, Macpac is up 5% in LFL sales for the first six weeks, driven by strength in travel-related categories.
Super Retail Group CEO and managing director Anthony Heraghty said the total group sales record for the first half, which was mostly driven by its other subsidiaries BCF and Supercheap Auto, resulted in a profit before tax (PBT) of $204 million, above the company’s previously announced guidance range.
“I would like to recognise the hard work of our 15,000 team members who have been instrumental in achieving this positive outcome,” Heraghty said. “To have delivered record first half sales of more than $2 billion and net profit after tax of $143 million is a very good result in the context of an increasingly challenging consumer environment.
“During the first half we reached a number of milestones in the execution of our corporate strategy including the successful relaunch of our Rebel active loyalty program, the commencement of construction of our new automated distribution centre and the opening of our 750th retail store.”
Rebel’s first half sales decline came as consumer spending softened in the second quarter, Super Retail reported, with LFL sales down 3 per cent reflecting a decrease in units per transaction.
Football and licensed were the top performing categories at, while demand for high value items such as running machines, home training and basketball systems declined.
Rebel’s first half result also includes the impact of a $5 million provision for deferred revenue as a result of loyalty credits issued to customers. The provision is expected to be approximately $8 million in total for the full year FY24, in line with previous disclosure.
The introduction of the loyalty program had a 70 basis points adverse impact on rebel’s first half PBT margin. Underlying gross margin was flat prior to the 70 bps adverse impact of the loyalty program as Rebel maintained promotional discipline despite increased discounting from competitors.
Segment PBT declined by 23 per cent to $65 million. PBT margin fell by 260 bps which Super Retail Group claimed reflected higher operating expenses due to the impact of inflation on rent and wages and the deleveraging impact of lower sales.
Active club membership at Rebel grew by 15 per cent and club members represented 76 per cent of total sales.
Online sales of $120 million represented 18 per cent of total sales, while click and collect represented 31 per cent of online sales.
Rebel opened one store and closed one store resulting in 159 stores at period end.
Meanwhile, Macpac's LFL sales declined by 5 per cent in Australia following a warm, dry winter, however LFL sales in New Zealand increased by 10 per cent driven by strong growth in packs, gear and accessories.
Following a challenging first quarter due to mild winter weather, sales momentum improved in the second quarter for Macpac, Super Retail reported. Sales in key travel categories benefitted from increased outbound tourism.
Gross margin declined by 200 bps due to unfavourable exchange rate movements and mix shift to lower margin equipment and accessories.
Segment PBT fell by 50 per cent to $8 million. Segment PBT margin decreased to 7.5 per cent reflecting lower gross margin and higher operating expenses due to the impact of inflation and a larger store network.
Active club membership grew by 7 per cent and club members represented 74 per cent of sales.
Online sales of $19 million represented 18 per cent of total sales, while click and collect represented 17 per cent of online sales.
Macpac opened four stores resulting in 93 stores at period end.
Heraghty said while there are signs of a more subdued consumer environment, the company is well positioned for the future.
“The group continues to focus on optimising margin and driving cost efficiencies in the business,” Heraghty said. “Inflationary pressure on cost of doing business is expected to moderate but will continue to impact wages and rent in the second half.”
The group expects to invest $140 million of capital expenditure in FY24 to fund its store development program and construction of a new distribution centre, as well as group-wide capabilities.
Group and unallocated costs in the second half are expected to be approximately $22 million, which would result in a full year segment net profit before tax impact of $37 million.