Super Retail Earnings: Better Finish to the Year, but Business Is Slowing

We increase our fair value estimate for no-moat Super Retail by 5% to AUD 10 per share, principally due to the time value of money. Fiscal 2023 sales of near AUD 2 billion beat our estimate by 2%. And while we calculate pretax profit margins declined by almost 100 basis points in the second half versus the previous corresponding period, we had expected intensifying competition to weigh more on gross profit margins, as well as greater operating deleverage as the cost of doing business pressures build across the retailing sector. Fiscal 2023 underlying earnings beat our estimate by 9%, but our investment thesis stands.