Super Retail: Higher Labor Costs Point to Falling Earnings
Trading momentum is soft across all of no-moat Super Retail’s brands: Supercheap Auto, Rebel, BCF, and Macpac. In the first 10 months of fiscal 2024, group sales are up 2% on the previous corresponding period. Sales growth is deteriorating in the second half of fiscal 2024, as expected, but tracking ahead of our prior forecast. We marginally upgrade our sales estimates by 2% in fiscal 2024. Gross margin is also holding up better than we had anticipated, flat with the previous corresponding period. We upgrade our fiscal 2024 adjusted earnings per share estimate by 5% to AUD 1.06. However, our long-term estimates are largely unchanged.