With improving sentiment for an interest rate cut being on horizon, the ASX Retail Industry could be offering fresh opportunities to invest. The stable economy could boost shopper’s confidence thus driving retail shares up.
Super Retail Group Limited (ASX: SUL)
Super Retail Group Limited announced its FY24 annual results for the period ended 30 June 2024, wherein it reported having achieved another year of record sales in FY24, with a 2% increase to $3.9 billion, reflecting the effective implementation of the Group's strategic initiatives.
Online sales for the Group rose by 9 percent, reaching $485 million, and constituted 13 percent of total sales, up from 12 percent in the previous comparable period. Notably, Click & Collect transactions represented 45 percent of the Group's online sales.
The Group's gross margin improved by 10 basis points to 46.3 percent, despite heightened promotional competition across its operational categories.
However, the Group's cost of doing business as a percentage of sales rose by 120 basis points to approximately 36 percent, largely due to inflationary pressures on wages and rental costs.
Normalized net profit after tax for the Group fell by 11 percent to $242 million, while statutory net profit after tax decreased by 9 percent to $240 million.
The Group’s operating cash flow totalled $635 million, which was $81 million lower than the previous comparable period, primarily due to increased income tax payments of $133 million in FY24 compared to $64 million in FY23.
The Group reported a statutory earnings per share (EPS) of 106 cents and a normalized EPS of 107 cents, declaring a fully franked final ordinary dividend of 37 cents per share and a fully franked special dividend of 50 cents per share. As of 30 June 2024, the Group maintained a cash balance of $218 million.
The Group is experiencing notable growth in its store network, especially for its Supercheap Auto, BCF, and Macpac brands. Additionally, inventory levels are maintained at a strong position to facilitate sales growth across the expanded network of stores. Furthermore, the company’s brand reputation and marketing initiatives are thriving, exemplified by the recently concluded Best Performing Oils promotional campaign for Supercheap Auto. Collectively, these elements are poised to ensure ongoing revenue growth for the Group, particularly as it aims to open an additional 10 stores in FY25, while 28 stores are currently undergoing refurbishment.
Temple & Webster Group Limited (ASX: TPW)
Temple & Webster Group Limited released its annual financial results for the fiscal year 2024, concluding on 30 June 2024, on 13 August 2024.
The company reported a record revenue of $497.8 million for FY24, reflecting a 26% increase compared to the previous year, primarily attributed to a 31% rise in active customers, reaching an unprecedented total of 1.1 million. This performance is particularly noteworthy in light of a general decline of approximately 4% in the furniture and homewares market over the same period, which enabled Temple & Webster to enhance its market share by 31% year-on-year.
The gross margin percentage for FY24 increased to 33.4%, up from 32.6% in FY23. This despite the inflationary environment and higher interest rates affecting household finances.
Additionally, all other operating expenses decreased as a percentage of revenue in FY24, attributed to strategic cost-base investments being surpassed by revenue growth and efficiency improvements facilitated by Generative AI.
The EBITDA stood at $13.1 million, aligning with the Group's previously communicated range of 1-3%, at 2.6%, while the profit before tax amounted to $6.4 million.
The asset-light, negative working capital model of TPW generated positive free cash flows of $25.8 million, culminating in a closing cash balance of $116.4 million. The Group continued to maintain a debt-free status.
The company remains committed to its customer-centric strategy, actively enacting various pricing adjustments to meet the needs of clients facing rising cost of living challenges. Remarkably, the company has commenced fiscal year 2025 with robust performance, achieving a 26% year-on-year growth by mid-August 2024 itself, thereby reinforcing its long-term objective of generating $1 billion in annual revenue.
Source: Company's Report
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