Sales not so super

Bank warns of tough times

SUPER Retail Group’s shares have tumbled after it unveiled a disappointing first-half profit fall and announced its takeover of New Zealand outdoor brand Macpac for $A135 million.

The ASX-listed retailer says it will call on existing debt facilities to acquire 54 Macpac stores across Australia and NZ, and consolidate its Rays outlets under the Macpac brand.

SRG, whose first-half profit has slipped 3 per cent to $72.2 million, says the deal should be done by March 31.

Shares in the owner of Supercheap Auto, BCF, Rays and Rebel, tumbled by as much as 17 per cent during morning trade.

Chief executive Peter Birtles told investors the company was up against fierce competition and a cautious consumer.

Those competitors include online behemoth Amazon, which launched locally in December, and the world’s biggest sporting goods retailer, Decathlon, which recently opened its first physical store in Australia after having an online presence Down Under during the past two years.

He said SRG had decided the best course was to acquire, consolidate and grow after market research and Rays’ transformation had shown Australia’s $2.2 billion adventure outdoors retail sector needed a big box specialist. Macpac had the potential to lead the adventure retail market in Australia and NZ.

Its design and apparel sourcing would add value to BCF and Rebel, while the SRG’s supply chain, marketing and retail operations would help grow Macpac, he added.

Macpac — which began in 1973 selling hiking packs in Christchurch and currently has 54 stores across Australia and NZ — is expected to generate sales of about $A86 million and pro-forma earnings before interest, tax, depreciation and amortisation of $14 million in the year to March 31.

Mr Birtles said one-off costs in the first half had included transformation of BCF and the rebranding of Amart to Rebel stores.

Super Retail Group lifted overall revenue 2.2 per cent to $1.3 billion. MORE people are finding jobs and business conditions are positive but retailers will experience tough times for a few more years yet, the central bank has warned.

The minutes of the Reserve Bank of Australia board’s February meeting, at which the cash rate was again left at a record low of 1.5 per cent, show concerns remain about low inflation and wages growth.

“Strong competition in the retail sector, which had placed downward pressure on the prices of consumer durables and food for some time, was expected to persist in the next few years,” the minutes said.

The board noted low household income growth had constrained consumption, despite better than expected jobs growth and a drop in the unemployment rate in 2017.

“Even with the strength in the labour market, wage growth was yet to pick up,” the minutes said.