Return Trends At Super Retail Group (ASX:SUL) Aren't Appealing: What's Going On?

Alright, let's dive into the world of Super Retail Group (ASX:SUL), the owner of brands like Supercheap Auto, rebel, BCF, and Macpac. These brands cater to the auto, sports, and outdoor leisure markets, and they've been a part of many Australians' lives for years. But lately, the return trends at Super Retail Group haven't been as appealing as they once were. So, what's going on?



First things first, let's take a look at the numbers. In 2024, Super Retail Group's revenue was 3.88 billion, an increase of 2.10% compared to the previous year's 3.80 billion. Earnings were 240.10 million, a decrease of -8.71% compared to the previous year. These figures might not seem too alarming, but when you consider that the Specialty Retail industry saw earnings growing at 15.4% annually, and the company's earnings growth was only 13.2%, it becomes clear that Super Retail Group is lagging behind its peers.

Now, you might be thinking, "Well, that's just one year. Maybe next year will be better." But when you look at the bigger picture, you'll see that Super Retail Group's return trends have been less than impressive for quite some time. The company's share price has been volatile, and it's underperformed compared to both its sector peers and the broader market.

So, what's causing this underperformance? There are several factors at play here:

1. Slowing Revenue Growth: Super Retail Group's revenue growth has been slower than the industry average. In 2024, the company's revenue grew by 2.10%, while the Specialty Retail industry saw earnings growing at 15.4% annually. This slower growth in revenue has likely contributed to the company's underperformance.
2. Lower Earnings Growth: Super Retail Group's earnings growth has also been lower than the industry average. The company's earnings grew at a rate of 13.2% annually, compared to the industry average of 15.4%. This lower earnings growth has likely impacted the company's stock price performance.
3. Lower Return on Equity (ROE) and Net Margin: Super Retail Group's ROE is 17.5%, and its net margin is 6.2%, which are lower than the industry averages. A lower ROE and net margin can indicate that the company is less efficient in generating profits from its assets and revenue compared to its peers.
4. Dividend Cuts: Super Retail Group has cut its dividends in recent years, which can negatively impact investor sentiment and the company's stock price. For example, the company's dividend per share decreased by 11.54% in 2024 compared to the previous year.
5. Legal Issues and Scandals: Super Retail Group has faced several legal issues and scandals in recent years, which can negatively impact the company's reputation and stock price. These issues include whistleblower claims, allegations of improper spending, and lawsuits against the company and its executives.

Now, you might be thinking, "Well, that's all well and good, but what can I do about it?" The truth is, there's not much you can do to directly impact Super Retail Group's return trends. However, you can make informed decisions about your investments based on the information available. If you're a shareholder in Super Retail Group, it might be worth considering whether to hold onto your shares or diversify your portfolio to include other companies with more appealing return trends.

In conclusion, the return trends at Super Retail Group (ASX:SUL) haven't been as appealing as they once were, and there are several factors contributing to this underperformance. While there's not much you can do to directly impact the company's return trends, you can make informed decisions about your investments based on the information available. As always, it's essential to do your own research and consider seeking advice from a financial professional before making any investment decisions.