Searching ASX listed companies for high quality dividend paying stocks led to this turn around stock.
Super Retail Group Limited (ASX: SUL)
Super Retail Group Limited (ASX: SUL) reported solid performance for the first half of FY25, with total sales reaching $2.1 billion, a 4% increase compared to the previous year. The company saw growth across various segments, including a 1.8% increase in like-for-like sales and a 10% rise in online sales, totaling $286 million. Despite these positive results, the company faced pressure on its gross margin, which decreased by 70 basis points to 45.6%. The increase in operating costs, largely due to inflationary pressures and expanding the store network, contributed to a 9% decline in statutory net profit after tax (NPAT), which amounted to $130 million. The company’s cash flow remained strong, with operating cash flows of $389 million.
The company also maintained a conservative financial position, ending the half-year with no drawn bank debt and a healthy cash balance of $168 million. This strong balance sheet gives the company flexibility to consider future capital management initiatives. Super Retail Group remains focused on maintaining a solid cash position while managing operating costs, which are expected to continue to rise in the short term due to inflation. The company is among high dividend stocks, having declared a fully franked interim dividend of 32 cents per share, which will be paid on 15 April 2025. This payout is in line with the company’s policy to distribute between 55% and 65% of underlying NPAT as annual dividends.
The company’s strategy to focus on store network expansion and refurbishments is continuing, with 19 new stores opened and 14 refurbished in the first half of FY25. Additionally, the launch of a new Victorian distribution center in H2 FY25 is expected to improve supply chain efficiency and reduce costs in the long term. However, there will be additional transitional costs during this period, which are expected to increase the Group and unallocated costs by $10 million for FY25. The company has planned capital expenditure of $165 million for FY25, with a significant portion directed towards the store development program, the new distribution center, and technology improvements.
Super Retail Group is cautiously optimistic for the second half of FY25, with like-for-like sales up 5% in the first seven weeks. Strong performances from brands like rebel and BCF, along with effective loyalty programs, are expected to drive continued growth. Despite ongoing inflationary pressures, Super Retail Group is focused on managing costs effectively and is well-positioned to navigate the challenging market conditions while maintaining its commitment to delivering value to shareholders.
(Source: Company’s Report)
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