Can a Retailer Be a Defensive Gem? Super Retail Group Thinks So
When investors look for shelter in a volatile market, the usual suspects include utilities, infrastructure, and health care. Retail rarely tops the list. But Super Retail Group (ASX: SUL) is quietly making the case that a well-run, consumer-facing company can behave like a defensive stock even in a challenging macroeconomic environment.
With four of Australia and New Zealand’s most well-known brands Supercheap Auto, rebel, BCF, and Macpac - SUL is not just surviving but thriving. The company’s FY24 performance highlights strong operational execution, disciplined capital management, and a customer base that keeps coming back, even when consumer sentiment is under pressure.
Delivering in a Cautious Consumer Climate
SUL generated $3.88 billion in total sales for FY24, a result that reflects disciplined growth and strong demand in key categories. The Group achieved a normalised profit before tax (NPBT) of $342.6 million, landing comfortably between its internal target and stretch goals.
Importantly, this profit translated into total dividends of 119 cents per share, including a special dividend of 50 cents. This payout wasn’t symbolic it demonstrated the company’s confidence in its balance sheet strength and cash generation. It also positioned SUL as one of the more consistent dividend payers among retailers.
Performance across brands was varied but collectively solid. BCF was a clear standout, posting 9.1% like-for-like sales growth in the second half of FY24 (Weeks 27-44). Macpac saw recovery as weather trends stabilised, and consumer demand returned. Even as economic uncertainty persisted, Group-wide like-for-like growth lifted to 3.1% in the second half, up from 1.8% in the first showing improving momentum.
Balance Sheet Strength and Future-Proofing
One of the most compelling aspects of SUL’s positioning is its balance sheet. The company reported $218 million in cash and no drawn bank debt, giving it strong financial flexibility heading into FY25. This liquidity is already being put to use in strategic, long-term investments.
Among its forward initiatives are a new automated distribution centre in Victoria, designed to improve logistics efficiency, and a full HRIM system transformation to streamline workforce planning and payroll. Together, these projects are expected to incur around $29 million in FY26 under Group and Unallocated costs, but they’re seen as foundational to driving future margin gains and operational scale.
In addition, the Group’s loyalty platform continues to deliver tangible value. With 11.5 million club members, accounting for 77% of total sales, SUL has built a recurring revenue base that’s rare in retail. These programs drive engagement, repeat purchases, and brand stickiness.
What Makes SUL Defensive?
It’s not just about categories it’s about consistency. Super Retail Group may not operate in a regulated sector, but it shows the same traits: predictable earnings, healthy dividends, low leverage, and customer loyalty. Even under economic pressure, it’s maintaining margin discipline, avoiding overstocking, and reinvesting smartly.
In an uncertain market, that’s exactly the kind of business investors can lean on. Super Retail Group may not be a utility, but it’s acting like one and that could be reason enough to keep it firmly on the radar for investors seeking steady performance over speculation.
Is APA Group the Ultimate Defensive Play in a Volatile Market?
In an investment landscape shaped by high interest rates, persistent inflation, and shifting energy policy, investors are leaning hard into resilience. Defensive sectors are back in focus, and utilities once considered staid and slow are quietly re-emerging as portfolio anchors. Among them, APA Group (ASX: APA) stands out not just for its dependable cash flow but for its evolving strategy in securing Australia’s energy future.
The question isn’t just whether utilities are defensive it’s whether the right utility, like APA, can offer both protection and growth in a volatile economy.
APA Group: Australia's Energy Superhighway
APA Group owns and operates Australia’s largest gas transmission network, spanning more than 15,000 kilometres. Its infrastructure delivers around 50% of the nation’s gas supply, linking producers to major demand centres across eastern and southern Australia. With $27 billion in regulated and long-term contracted assets, APA provides the kind of revenue predictability investors crave during periods of economic instability.
More than 90% of APA’s revenues are secured through inflation-linked contracts, making it less exposed to market shocks. In short, when economic winds shift, APA keeps flowing literally and financially.
Defensive By Nature, Strategic by Design
While its utility status grants it natural defensiveness, APA isn't standing still. It continues to build capacity and modernise Australia’s energy infrastructure to meet rising demand. In FY24, APA acquired the Atlas to Reedy Creek Pipeline, a fully integrated asset expected to deliver $12 million in annual EBITDA by FY26. The asset complements APA’s East Coast Grid and supports new gas transport agreements, including a significant long-term contract with Senex.
This is a classic APA move: leverage existing assets to extend reach, boost volume, and lock in earnings with long-term, bankable partners.
Tackling the Energy Gap - Before It Hits
With concerns of a domestic gas shortfall by 2034, APA has already initiated a multi-year East Coast Grid Expansion Plan, committing $75 million over the next two years. Projects like the Moomba to Sydney Ethane Pipeline conversion, targeted for 2026, and the proposed Stage 4 expansion expected to add up to 500 terajoules of new gas storage by 2029 show how APA is solving tomorrow’s energy shortages, today.
It’s a case of infrastructure being built ahead of demand not after the crisis arrives.
Growth With Control
APA’s $1.8 billion organic growth pipeline through FY27 spans gas, storage, and renewables. But it's not overextending itself. Through selective partnerships (such as with EDF) and asset recycling, APA is maintaining a strong balance sheet while funding expansion. Projects like the Sturt Plateau Pipeline which will eventually connect to the gas-rich Beetaloo Basin underline APA’s commitment to long-term value creation.
Why APA Still Makes Sense in 2025
APA has reaffirmed its FY25 underlying EBITDA guidance of $1.96-$2.02 billion, with distributions expected at 57.0 cents per security. A 1.5% DRP discount adds to its appeal for income-focused investors.
In a time when predictability is rare, APA Group offers a rare blend: regulated returns, strategic foresight, and inflation-linked resilience. Utilities aren’t just defensive they’re essential. And APA might just be one of the smartest holds in a market short on certainty.
(Source: Company Announcements)
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