Super Retail Group, the parent company of BCF and Rebel, says its supply chains are becoming too busy to handle the influx of goods.
The retailer said it had a massive increase in inventory to combat the effects of the COVID-19 scare and other supply chain issues.
Super Retail Group said on Monday that the rising costs of doing business could threaten its gross margin in the second half of the year.
Despite beating analyst expectations, Super Retail’s shares fell almost 3 percent in early afternoon trade.
Aequitas Investment Partners‘ said the company’s inventory build-up and tight working capital conditions raised concerns about the sustainability of the recovery.
Super Retail was one of the companies that raised prices to pass on the higher costs to its customers.
The retailer also showed how the coronavirus scare affected its in-store sales. However, after the concerns eased, customers started returning.
For the half-year to Christmas, Super Retail’s profit fell 36 percent to $110.8 million. Sales declined 4 percent to $1.7 billion.
The company’s results were significantly higher than those recorded before the outbreak.
Super Retail’s like-for-like sales were down 4.8 percent in the December quarter, excluding the impact of store closures and openings. The sales decline was mainly caused by the closures in Victoria and NSW.
The company noted that the rise of the omicron variant affected sales in January. It was also negatively affected by the lower foot traffic in its Rebel stores.
The company’s stock build-up increases the risk of not having enough inventory to capture sales. It also affects the cash flows of the company.
In response to the supply chain disruptions and the uncertainty of the situation, the company has increased its inventory levels.
During a conference call, Super Retail’s management noted that the cost of doing business had risen significantly over the past year.
Living Styles are also experiencing a supply squeeze with delays with shipping. You can still save on your purchase from Adairs with an Living Styles discount code.
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