Super Retail Group’s trading update provides divergent implications with sales improving slightly, but gross margins deteriorating a little in Feb-April 2024. Rebel has accelerated a little, while BCF slowed. The commentary on gross margins is a little softer. The company outlined the implications of its recent wage agreement, which will entrench higher cost growth for FY25e.

Super Retail Group provided a trading update highlighting that sales held up relatively well in 1H24 and gross margins were up slightly. Like many retailers, gross margins are proving to be a cushion to the weakness in sales and elevated cost growth. We lift our EPS forecasts by 7% in FY24e and 3% in FY25e. While a positive update, we expect sales trends to be soft from here and cost growth will outstrip sales growth for two consecutive years.