Super Retail Group sees sports sales growth, but will Amazon shake up Rebel Sport?

Super Retail Group says it sports retail segment is growing as it works towards earnings growth of 18% for the year, but experts warn of “challenging times” ahead for Australian sports retailers.

In a May trading and strategy update delivered yesterday, Super Retail Group managing director and chief executive officer Peter Birtles said the business continues “to expect to deliver annual growth in Group Total Segment EBIT (earnings before interest and tax) of between 16 to 17% on the prior comparative period”.

The business revealed that in the previous 43 weeks, sales for the group’s sports retail segment grew 8%, off the back of sports retail brands Rebel Sports and Amart.

Growth was also strong within the company’s auto business Supercheap Auto, which saw sales growth of 4.5%, however, leisure brands BCF and Ray’s Outdoors saw a sales decrease of 2% thanks to multiple Ray’s stores closures.

Super Retail Group posted a total group sales increase of 6.6% to $1.3 billion in the first half of the FY17, and earnings in its sports segment jumped 8.5%, to $50.9 million.

Peter Birtles said in the trading update this week that despite the positive results, the company had experienced a “subdued” retail environment and lower customer traffic. Currently, Australia has 101 Rebel Sports stores and 64 Amart stores.

However, the company has seen “rapid” expansion in its e-commerce offerings, reporting in its February half-year results presentation it had seen digital sales growth of 73% compared with the prior comparative period.

Sporting goods retail experiences its best sales towards the beginning of the year, says retail expert and associate professor at QUT Business School Gary Mortimer, and the health and wellbeing market is “viable”, but ripe for disruption.

“There are categories of products that are more exposed to online shopping, and sporting goods is one of them. You don’t need to go in-store, a basketball is a basketball, and a cricket bat is a cricket bat,” Mortimer says.

“In the US we’re seeing a 4.5% decline on customers buying sporting and athleisure goods in-store, so incumbent players in the market might start to see in-store sales flatten a bit and online sales start to grow.”

International retailers to shake up market

Super Retail Group is pushing an omnichannel approach to retailing, with plans in place to increase investment in the digital aspects of the business, with $7 million of digital investment costs forecast.

“We are developing a business that will allow our customers to shop their way and the integration of our web business with our extensive network of conveniently located stores is a major competitive advantage,” Birtles said in the announcement this week.

However, Mortimer warns a slew of incoming global sports retailers could lead to a “challenging time” for businesses such as Rebel Sport, which had existed until now with little competition in the Australian market.

“I expect to see the same impact on sports retailers as global fast fashion retailers had on incumbent fashion retailers in Australia,” Mortimer says.

“Businesses like JD Sports moving into Australia, and French sports retailer Decathlon coming soon after, it’s going to really shake up the market.”

“The athleisure and sports good market is currently owned and operated by Super Retail Group, and there’s not a great deal of competition. The entry of global retailers will see prices fall, and retailers might see some challenging times.”

Birtles discussed about the arrival of retailing giant Amazon at the Macquarie Australia conference in Sydney this week, Fairfax reports, discussing Super Retail Group’s market share and promoting the his company’s product diversity as a point of differentiation.

“We’ll continue to work with our suppliers around exclusive product, first to market, because that is a key piece. When we look at the product that is available on Amazon marketplace it tends to be product that is not the very latest, coming towards the end of run,” he said.

Mortimer believes Amazon will likely shake up businesses such as Rebel Sports, and consumers won’t hesitate to shop on price once the retailer touches down.

“With Amazon coming in, consumers who know they want a cricket bat in a certain size and brand won’t go into a store to find it, they’ll head online,” he says.

“At that point, consumers will just be shopping on price.”

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