Super Retail (ASX:SUL) stock price tumbles 10% after profit tumble

the Super Retail Group Ltd (ASX:SUL) the stock price is plummeting after the company reported results for the first half of fiscal 2022.

At the time of writing, Super Retail Group stock price is $11.59, 9.81% lower than its previous close.

Super Retail Group share price plunges alongside earnings

Super Retail Group struggled in the first quarter and a rebound towards the end of the first half of fiscal 2022 was not enough to secure its recovery.

The spread of the Omicron variant of COVID-19 has disrupted the company’s business.

Super Retail Group’s cost of operation also rose as it increased investments to support growth and eased cost containment measures.

It faced higher payroll costs due to staff retention during shutdowns and absenteeism, as well as increased digital costs.

In addition, he opted to build a strong inventory position for the second half to avoid possible supply chain disruptions.

Its gross margin was 46.7%, 100 basis points below the prior first half but 170 basis points above the first half of fiscal 2020.

Its margin was weighed down by higher freight and transportation costs, increased home delivery sales and the normalization of promotional activity in the second quarter.

However, it was supported by improved supply, pricing and the custom range of stocks.

Not to mention that during the period, the company opened 15 new stores and carried out 28 renovations and relocations.

During the six months, Super Retail Group’s operating cash flow was $157 million, a decrease of $370.2 million.

He ended the period with no bank debt and $94 million in cash.

What else happened in halftime?

In the 6 months ended Dec. 31, the company saw record online sales.

They rose 64% to $389 million. This represented 23% of the company’s total sales for the period.

Additionally, click and collect sales increased 109% to $226 million, representing 58% of online sales.

3 of the company’s 4 major brands saw their sales decline in the last half.

Only Macpac recorded an increase. Its sales increased 4% to $65.5 million thanks to strong same-store sales and new store openings.

Meanwhile, Supercheap Auto sales fell 6.9% to $616.1 million.

BCF also saw sales drop 2.2% to $418.5 million.

Rebel saw sales drop 2.9% to $605.6 million. Its fall is due to reduced CBD foot traffic during the peak Christmas sales period and delayed new season stock shipments from key brands.

What did management say?

Super Retail Group CEO and Managing Director Anthony Heraghty commented on the company’s first half saying:

We are pleased to have delivered a strong sales performance in the first half, despite challenges from Omicron and a disrupted global supply chain.

After the COVID-19 shutdowns disrupted trade in the first quarter, we ended the half quickly, delivering a record second quarter sales result.

Our omni-retail capability and execution has been key to meeting consumer demand, underpinning record digital sales performance through the adoption of Click & Collect.

We entered the second half with strong commercial momentum, which continued into the new calendar year. Going forward, the group will continue to reinvest in the business, including digital, loyalty and network to execute our strategic priorities and grow our 4 core brands.

And after?

Although the company did not provide guidance, it did issue a trading update for the first 6 weeks of the second half.

For the first 6 weeks of the second half, excluding Boxing Day, the company’s like-for-like sales increased by 6%.

BCF leads the charge, rising 12.2% to post record sales in January.

Supercheap Auto is also performing very well, with a sales increase of 9.3%.

Only Rebel reported fewer sales, registering a 2.4% drop.

“It’s been a positive start to the year,” Heraghty said. “We saw an encouraging improvement in sales momentum in the second half as consumer caution began to fade.”

“As COVID-19 continues to disrupt our customers, team members and business partners, the group remains focused on executing our business strategy and investing for growth to deliver long-term value. term to our shareholders.”

Super Retail Group expects to report $125 million in capital expenditures for fiscal 2022. This is due to its store development program and investments in its omni, loyalty and digital capabilities.

Additionally, it expects global supply chain disruptions to ease over time, but will impact its gross margins in the second half.

Super Retail Group Share Price Overview

Today’s tumble sent Super Retail Group’s share price into long-term red.

It is now 7% lower than it was at the start of the year. It is also 4% lower than it was at the same time last year.