Investors had been braced for disappointment after warnings from analysts last week, but both shareholders and market-watchers were surprised by the quantum of the drop, sending shares diving 4.1 per cent in early trade before recovering to close down 1.84 per cent to $9.58.
Chief executive Anthony Heraghty told The Age and The Sydney Morning Herald while he believed consumer confidence was down across the board, Australians’ “confidence to have a holiday” had been hit “most acutely”.
Mr Heraghty said the company had struggled to forecast the full impact of the bushfire crisis on sales due to the success of the Black Friday sales weekend, which had raised expectations of a slowdown in December sales.
“We had always anticipated the subsequent weeks after [Black Friday] to be somewhat muted in sales. So what made this a bit more complex was trying to define what was because of that versus an actual reduction of activity in the pre-Christmas period,” he said.
Despite a jump in monthly sales on the back of Black Friday, retailers had raised concerns over muted Christmas trade as consumer confidence wavered and shoppers failed to spend the government’s $25 billion worth of tax cuts.
An unprecedented number of store closures in the new year has also stoked retailer anxiety over Christmas trade disappointment.
Mr Heraghty said the company’s outdoor division had usually been able to withstand extreme weather events in the past but noted the breadth of the bushfire crisis had prompted the significant sales hit.
The executive was reluctant to discuss if the extreme bushfires were due to the effects of climate change, saying he was “a humble retailer”, but noted he had “no disagreement with commentary that would indicate as such”.
Adjusting its forecast, Super Retail said earnings before interest and tax (EBIT) for the half would be $113 million to $115 million, a drop of between 7.6 per cent and 9.2 per cent on the $124.5 million in EBIT it posted for the first half of 2019.
Citi analyst Bryan Raymond said the bushfire impact on Super Retail’s outdoor division was “larger than expected” but noted the risk from bushfires were expected in the market, maintaining a buy rating for the stock.
Mark Christensen, portfolio manager at Super Retail shareholder Pengana Capital, said while he was buoyed by the continued strength of Rebel and Supercheap Auto, he believes it will be some time before sales at BCF and Macpac recover.
“The real question for investors to watch from here will be when does that outdoor activity resume?” he said.
Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.