Profit Briefs: COL, SUL, BAP, VCX

As we have seen during the pandemic, retailing has benefited mightily as consumers, mostly confined at home, spent heavily in 2020 – driving up sales across the board for a wide range of products from food to furniture, booze, home delivered food and coffee, smartphones, renovations, homes, cars and car parts and when they could, domestic travel.

But this time around with the worsening situation and tightening lockdowns in Sydney, Melbourne, Canberra, and other centres, the reaction is more muted, a rise in some areas such as food as consumers become more cautious.

Supermarket giant Coles thinks the supermarkets giant saw weak sales growth in the first seven weeks of 2021-22 of just 1% as the lockdowns came and went and were tightened along parts of the East Coast in particular.

As the hard snap lockdowns have increased, local shopping trends have re-emerged (as the results of Shopping Centres of Australasia in Tuesday suggested).

“As the number of snap local lockdowns increased, and the New South Wales lockdown was extended, ‘local shopping’ trends have re-emerged with eCommerce and neighbourhood stores outperforming shopping centre and CBD locations,” Coles explained on Wednesday.

That is not positive for the Coles as saw sales and profits improve from an easing of the shop local trend in the last half of 2020-19 and a rise in personal shopping at its outlets in major centres.

However, the company expects a normalisation in consumer behaviour in 2022 due to the vaccination rollout, as CEO Steven Cain said in the release:

“In February, we said the short-term outlook would be dependent upon the efficacy and pace of the vaccination program. Six months on, government forecasts are pointing to a more normal outlook from early in calendar 2022 including the longer-term prospect of increased migration.”

On top of this 2021-22 is expected to be a year of expenditure for Coles which has plans to spend $290 million during the financial year for its new Queensland distribution facility.

As well various other facilities across the country will have money spent on them to drive growth and efficiencies and the company will continue to spend heavily on store refurbishments.

Revenue at the supermarket giant for 2020-21 was up 3% to $38.9 billion thanks to the unwinding in local shopping and continued strength in Cole’s eCommerce segment.

The retailer said that its eCommerce sales contributed $2 billion in revenue up 52% on the prior year as more shoppers resort to online purchasing during lockdowns.

The company’s underlying profits grew 7.5% to top $1 billion ($1.005 billion) for the first time, as the company, like so many others, benefited from the pandemics and lockdowns. That was $7 million better than market consensus.

Liquor sales grew faster than group sales – up 6.6% to $3,525 million.

Coles said that despite easing on-premise consumption restrictions as the lockdowns lifted, more consumers opted to purchase online with larger orders.

The company lifted earnings before interest, tax, depreciation and amortisation (EBITDA) 5.4% (which was better than the 3.8% rise in inflation in the year) to $3,432 million.

A fully franked final dividend of 28 cents a share will be paid, taking the total for the year to a record 61 cents, up 6.1% from 2020.

Coles shares rose 0.054% to $18.34.


Like Coles, outdoors and sporting retailer Super Retail Group saw sales through its bricks and mortar outlets slow sharply in July as the extent and tightness of lockdowns increased across the East Coast of Australia.

The owner of Super Cheap Auto, Rebel, BCF and Macpaw products said in its 2020-21 earnings release on Wednesday that it is looking to strong online sales to help soften the sales drop over the first seven weeks of 2021-22.

The company has good reason to look to its online performance which saw sales surged 43% to $415.6 million in 2020-21 with Super Retail touting its ‘omni-retail strategy’ as key to withstanding the impact of the latest lockdowns.

The retailer total sales for the start of the financial year on July 1 had fallen 14%. This fall was exacerbated by the business trying to match the 32% growth rate in the same period last year (the higher comparative base performance a year ago meant a weaker performance this time especially with the new round of lockdowns)

CEO Anthony Heraghty said the lockdowns in Sydney and Melbourne had hurt sales, though the company’s online division was softening the blow with higher sales.

“Notwithstanding current COVID-19 disruptions, our omni-retail business model is performing well with record online sales in the month of July,” he said.

The Covid-hit start to the new financial year took attention away from what was a record performance in 2020-21, with total sales up 22% to $3.45 billion and adjusted net profit more than doubling to $306.8 million after segment normalised profit before tax jumped 108% to $435.8 million

All four of Super Retail’s major brands (Supercheap Auto, Rebel, BCF and Macpac) reported strong like-for-like (LFL) sales growth during the year. BCF led the way with 48.0% LFL growth, with Rebel (17.5%), Supercheap Auto (16.4%) and Macpac (14.2%).

The company will pay shareholders a final dividend of 55 cents per share on October 7, bringing the full-year dividend up to 85 cents.

This was sharply up on the 19.5 cents a share paid for Covid hit 2019-20 when the company, like many of its peers, cut payouts to conserve cash.

The shares hit an early high of $13.55 but then lost ground as analysts combed through the figures and didn’t like the weakness to the start of the new financial year, especially when it again lifted inventories to cover itself against a shortage of key products, especially from China and other parts of Asia where Covid Delta cases are rising.

SUL though has a strong balance sheet with no bank debt with $600 million in undrawn credit facilities to call on if needed.

The shares ended down 1% at $12.99.


For Bapcorp, the uncertainty being generated by the rise in Covid delta infections in parts of Australia, especially along the East Coast and the accompanying lockdowns saw the company (which owns the rival Autobarn chain of stores to SUL’s Super Cheap chain) warn of a softer year ahead in its 2020-21 results yesterday.

Bapcor said that the company’s performance was impacted in July by COVID lockdowns across most states in Australia and that as a result, it is now is aiming “to deliver proforma earnings at least at the level of FY21.

But it further warned that this “is dependent on the extent of lockdowns and other government-imposed restrictions.”

In other words, the longer the lockdowns and infections (Hint, NSW), the softer the 2022 results.

That’s why the shares fell more than 4% yesterday to $7.70, the lowest they have been since late May.

Like SUL and Coles, the weaker start to the new financial year took the gloss off what was a pretty strong set of figures for the year to June, a year when Covid was both the major negative and positive for Bapcor and so many other companies.

Bapcor revealed a 50% boost in full-year profit for the year to June and, like SUL, a much higher dividend.

The company said profit grew by $39.6 million on last year to $118.9 million, on a sharp 20.4% lift in revenue to $1.76 billion.

The performance was driven by a record year of earnings at Bapcor’s Burson Auto Parts and Precision Automotive Equipment segment.

Bapcor will pay shareholders a fully franked 11 cent final dividend – up from 9.5 cents a year ago – bringing its full-year payout to 20 cents a share. That was up 17% from the previous year’s 17 cents a share.

“As was the case in the first half of the year, every one of our business segments increased revenue and earnings, capitalising on the increased demand during the period while at the same time also delivering major projects across the group that will set us up for continued success,” Bapcor CEO Darryl Abotomey said in Wednesday’s release.

The business has however been affected by lockdowns at the start of the financial year. In FY22, Bapcor aims to deliver proforma earnings at least at the level of FY21.

“However, this is dependent on the extent of lockdowns and other government-imposed restrictions,” it told shareholders.


Unlike its rival Shopping Centres of Australasia’s 2020-21 results, there were more write downs in the year to June for mall giant Vicinity Centres.

Shopping Centres reported a statutory net profit after tax of $462.9 million on Tuesday, which included a $354.2 million uplift in the value of its portfolio as more people shopped locally, driving up revenue and rents at its more locally focused malls.

But Vicinity’s loss for the year to June was better than in 2019-20 when it took much larger impairments.

The statutory net loss of $258 million for the June 30 financial year was a big improvement on the previous year’s $1.801 billion red blotch.

The latest result was after impairments for the year of $642.7 million, significantly better than the $1.717 billion in the year before. There was also an impairment of goodwill charge of $427 million as well.

However, there were signs the company did better in the year to June. It reported a 7.4% jump in funds from operations (FFO) – the best measure of revenue that excludes lumpy property valuation movements – to $558.8 million.

That was better than the $520 million of FFO in the year to June, 2020, but still a lot less than 2019’s $689.3 million.

A final distribution per security of 6.6 cents a security was slightly below market expectations but there were “signs of stabilisation,” the company said on Wednesday.

Vicinity owns 60 malls across Australia including half of the country’s largest shopping centre, Chadstone in Melbourne’s east (which has been a frequent exposure site for Covid in the past year because of its popularity).

CEO Grant Kelley didn’t try to gloss over the impact of the pandemic on its business and in the sector.

“Financial year 2021 was an extraordinary year for Vicinity, our industry and the retail sector more broadly,” he said.

“The pandemic has had a significantly adverse impact on our business, however we are seeing some positive momentum in our financial results especially in regard to asset valuations, which seem to be progressing towards stabilisation,” he added.

However, there was positive momentum and underlying resilience in visitation and retail sales in the second half of the year as COVID-19 restrictions eased, although some city assets like Emporium Melbourne are struggling.

Vicinity said it has improved cash collections from tenants with 84% of gross rental billings collected and 93% net of waivers.

But the company had written off 90% of $230 million it has given in financial support to retail tenants since the outbreak of the pandemic in March 2020.

Investors liked the bones of the report – the securities gained nearly 2% on the day to end at $1.60.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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