SUPER Retail Group, which owns a portfolio of sports and leisure stores including Supercheap Auto, Ray's Outdoors, and Rebel, will transform the way it does business and how it communicates with customers to preserve its earnings in the midst of the online retail revolution.
On track to post its seventh consecutive year of double-digit profit growth, Super Retail will invest $73 million to future-proof its operation through an aggressive store refurbishment program, tighten its supply chain by sourcing directly from manufacturers in China and creating a strong digital presence.
The whole-of-business transformation could see half its $95 million marketing budget switched to behind the scenes customer interaction, ditching traditional platforms such as mail catalogues and newspaper advertising for targeted email campaigns and online interaction. "We're taking the opportunity to invest in the organisation on the backlog of a strong trading performance and really position the company for the changes in the retail environment," Super Retail managing director Peter Birtles said.
Super Retail proved on Wednesday it was a strong presence in the retail market, posting a net profit of $60.61 million for the 26 weeks to December 29, up 74 per cent and helped by the full inclusion during the half of its recently acquired Rebel and Amart Sports businesses.
Revenue for the half rose 36.6 per cent to $1.037 billion.
Mr Birtles said consumer spending was strong on leisure and sporting activities, helping like-for-like sales lift 5.2 per cent in the auto division, 2.8 per cent in leisure stores and 8.3 per cent in sports.
He said since Christmas the second-half like-for-like sales had grown 5.5 per cent for auto, 10 per cent for leisure and 8 per cent for sports.
Shoppers at Supercheap Auto were spending more on better quality products. The retailer is reviewing its Ray's Outdoors and Fishing Camping Outdoors business in New Zealand
Its underperforming Goldcross Cycles banner would steadily be absorbed into Amart Sports stores and have only a small independent presence in Australia.
Mr Birtles said the $73 million spend on IT infrastructure, digital sales and supply chain systems was vital to preserve and grow earnings.
"We're talking about the changes in dynamics with the advent of retail becoming a global industry and the threat of online," he said.
"It's about putting in place the seamless systems so however our customers want to shop with us we can service that requirement."
Super Retail shares rose 24¢ to $10.88.