Mixed results Monday from two specialist retailers for the six months to December 31, with Super Retail reporting record sales and Baby Bunting suffering a near 60% slump in earnings.
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Sales for Super Retail Group (ASX: SUL) were up 15% in the December 2022 half year, compared to the same period in 2021, with like-for-like sales up a solid 11%.
The news saw SUL shares jump more than 9% at one stage on Monday. They settled to close up 7.6% at $12.34.
The company told the ASX it is expecting final audited revenue for the half-year to come in around $1.96 billion, with profit before tax expected to land between $212 million and $218 million, up around 20% from the December, 2021 half.
The company said its inventory balance was $30 million lower at the end of December than it was at the end of December 2021. The company expects that to ‘normalise’ this half as sales and stocks move back towards balance.
The 15% rise in headline sales was made up by an 18% rise at Supercheap Auto, 13% at Rebel while BCF sales grew by 7% and Macpac sales 55% (from a low base a year earlier).
SUL said it again had had no bank debt (as it did a year ago), “and a positive cash position at the end of the first half.”
CEO Anthony Hegarty said “all four core brands traded strongly over the peak cyber sales and Christmas holiday trading period as customers embraced the festive season, contributing to a record first half sales performance.
“Effective and targeted promotions and a disciplined approach to cost management has ensured that this top-line growth has translated into strong first half earnings,” he added.
Full details and the size of the interim dividend will be out next month.
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But it was a very different looking set of figures from specialist retailer Baby Bunting (ASX: BBN).
The company blamed softer than expected sales in the December trading period for the 59% slump in half-year profits reported on Monday.
In a statement to the ASX on Monday the company reported a 6.6% per rise in first half sales $254.9 million, but after-tax profit slid to $5.1 million from $12.5 million a year earlier and down 59%.
The news saw the shares sold off and they ended down more than 11% at $2.68, close to a low for the past year.
The poor earnings performance had been flagged back in October by CEO, Matt Spencer who revealed Baby Bunting’s gross margin had declined in the first quarter of 2023 for a range of reasons, including cutting prices on more of its products under its everyday low price” policy, as well as higher costs such as freight and transport.
The group’s loyalty program had also affected margins in the first quarter as customers redeemed rewards at a higher rate than the company had expected. The business has since changed the terms of its loyalty program.
On Monday Spencer told investors that while cuts in international shipping rates would help margins in the second half, the company’s overall half-year result was hit by “a combination of lower gross profit margin for the half and softer than anticipated sales in December”.
The company said in its announcement on Monday that the group’s sales growth in the second (December) quarter was “below Baby Bunting’s expectations towards the end of the quarter”.
Spencer said must-have baby goods though had continued to perform well over the half.
“Our core nursery categories, which are less discretionary such as car safety, prams and feeding, continued to perform well through the half and are an important part of Baby Bunting’s future growth,” he said.
The retailer’s profit numbers were also impacted by costs related to setting up its New Zealand business, where Baby Bunting is opening ten stores.
The company is expecting conditions to improve in the current second half, and is guiding to proforma full-year net profits of between $21.5 million and $24 million, down noticeably from the $29.6 million reported for 2021-22.
