Super Retail Group Ltd Investor Day – Capital-intensive growth

Research evidence excerpt

Super Retail Group Ltd Investor Day – Capital-intensive growth

-3.8%

Auto stores in FY31 representing 2.1% p.a. store growth, below the 415 store

Half Yearly Forecasts (FYE Jun)

opportunity. We expect Rebel to expand to 186 stores, a 2.9% p.a. store growth

Adjusted PAT (A$ mn)

run-rate, but below the 205 Rebel store opportunity. The new Rebel stores will 2025A 2026E 2027E

be skewed to regional towns below 50,000 people, which should be more H1 131 122A 134

profitable (lower theft and rents). BCF’s store opportunity (190-200) is more H2 102 79 89

FY 233 201 223

conservative in terms of growth in store count (2.8% p.a. over the next 5 years

vs. 3.2% over the past 7); however, this growth will be skewed towards Style Exposure

~3,500sqm superstores and ~2,500sqm large-format stores. This will improve

the network quality, as sub-2,000sqm stores will be scaled back.

• Capex of $160m p.a. required to deliver on the strategic growth agenda.

We forecast divisional PBT growth (ex-group and unallocated costs) of 7.8%

YoY in FY27 and 7.4% in FY28; however, substantial capex is required to

deliver store growth and supply chain efficiencies. Super Retail has always

been relatively capital-intensive vs. other discretionary retailers with leasehold

networks, with capex levels double JB Hi-Fi’s ($82m in FY25). The $160m p.a.

run-rate includes $40m-60m of project capex; however, there is no line of sight

to this unwinding; indeed it has been on a steadily rising trajectory for 10 years.

• Softer free cash flow drives a return to modest net debt. A combination of

1) earnings declines on project opex; 2) working capital build as strategic

inventory is purchased; and 3) elevated project capex results in our FY26E free

cash flow ($136m) being below dividends paid ($217m). We see an organic