Super Retail Group, which is the largest sporting goods retailer in Australia, will slow capital spending in 2015 due to economic uncertainty and low consumer confidence, Managing Director and Chief Executive Officer Peter Birtles told investors attending the company’s annual meeting.
Birtles disclosed that comparable stores sales at the Group’s Sports Retailing business, which includes the Rebel Sports, Amart Sports, Goldcross Cycles and Workout World, increased 3 percent during the 16-week period ended Oct. 18. Comparable store sales declined 8 percent, however, at its Leisure Retailing business, which sells hunting, fishing, camping, paddling and other outdoor leisure gear in Australia and New Zealand through Ray’s Sports, FCO and BCF stores.
Super Retail Group reported in August that its Leisure Retailing
business generated flat earnings before income taxes (EBIT) of $33.0
million in the fiscal year ended June 28, on sales of $552.5 million,
which were up 5.7 percent from the year before. At the time, the company said BCF sales had suffered from a decline in mining activity and cannibalization from the opening of new stores, while Ray’s Sports has exited Outdoor and BBQ categories as part of a restructuring. The Sports Retailing business reported EBIT declined 0.9 percent to $62.8 million on a 4.3 percent increase in sales of $734.0 million.
Overall sales performance so far this year has been in line with expectations,” said Birtles.
“We are pleased with the sales growth being delivered in both the Auto and Sports divisions,” he said. “As forecast, the Leisure division continues to be impacted by new store cannibalization and weak trading conditions in mining and regional areas-this impact is expected to reduce in the second half of the financial year. Sales at the Rays Outdoors and FCO businesses have been below expectations and a review of both businesses is underway.
“We continue to grow our network of stores across the Group,” Birtles continued. “In the Leisure division, we expect to open four new stores, close two stores and refurbish three BCF superstores. In the Sports division, we expect to open 14 new stores (mostly Amart Sports), close five stores and refurbish 15 stores.
Gross margins are tracking below prior comparative period for the year to date but are expected to be in line with the prior period over the full year. Full year EBITDA margin is expected to be in line with the prior year, after excluding prior year one-off tax and revenue adjustment benefits.
Depreciation costs are tracking in line with a 20 percent increase for the full year over the prior corresponding period due to the impact of of spending on information technology and distribution centers needed to deliver a multi-channel retailer experience.
We expect our capital expenditure to be around $90 million in the year ahead as we continue to invest in new stores and store refurbishments, fitout of the new Brisbane distribution centre and continue our investment in our multi-channel capabilities,” said Birtle. “The construction and fitout of the new distribution centre remains on track for commencing operations in February.