SUL - Super retail group

 SUL

Super Retail Group Limited (ASX: SUL) is the owner of four brands: Supercheap Auto, rebel, BCF and Macpac, and is one of Australia and New Zealand retailers.

www.superretailgroup.com

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Over the last 5 years, Super Retail Group Limited (ASX:SUL) has grown revenue steadily to roughly A$4.16 billion, though profits and margins have faced recent normalization and cost pressures following pandemic-era highs. The company maintains a conservative balance sheet with zero drawn bank debt, solid cash flows, and a healthy return on equity (ROE). [1, 2, 3, 4]

Revenue and Profit

Revenue: Grew at an average annual rate of about 6% over the past five years, rising from roughly A$3.55 billion in FY2022 to over A$4.07 billion in FY2025, and hitting A$4.16 billion in trailing twelve-month figures. [1, 2, 3, 4]
Net Profit: Peaked during the post-lockdown retail boom (around A$263 million in FY2022) before normalizing to A$221.8 million in FY2025 and approximately A$196 million over the recent trailing period due to rising operating and lease costs. [1, 2, 3, 4]

Debt and Financial Health

Bank Debt: Maintained with zero drawn bank debt, reflecting a very strong and conservative capital position.
Gearing & Liquidity: Operates with stable liquidity metrics, supported by strong operating cash flow generation (e.g., A$416 million operating cash flow). [1]

Return on Equity (ROE) and Returns

ROE: Historically strong and remaining in double-digits, shifting from near 19.8% during peak years down to a trailing rate around 15.13%.
Return on Assets (ROA): Moved from a peak of about 10.18% down to roughly 5.7% to 6.3% as asset bases and store networks expanded. [1, 2, 3, 4, 5]

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Over the last 10 years, the historical mean P/E ratio for Super Retail Group (ASX: SUL) is approximately 13.64, with a median of 13.57. The company’s valuation has fluctuated between a 10-year low of 5.88 and a 10-year high of 34.26, driven heavily by cyclical retail environments and shifting consumer demand. [1, 2, 3]

Year-by-Year Historical P/E Ratios

The following tracking represents the documented P/E multiples for Super Retail Group at the close of each calendar/fiscal period over the past decade: [1]

2025: 15.60
2024: 12.90
2023: 9.24
2022: 6.88
2021: 7.00
2020: 10.80
2019: 8.67
2018: 8.15
2017: 9.58
2016: 15.90 [1]

Key Valuation Insights

Current Standing: The Trailing Twelve Month (TTM) P/E ratio sits at roughly 14.74 to 15.14, rendering it closely aligned with its historical ten-year averages. [1, 2]
The 2021–2022 Lows: Super Retail Group saw compressed P/E multiples under 7.0x despite massive revenue boosts during the COVID-19 pandemic. Investors priced in fears that elevated outdoor, automotive, and sports spending (via Supercheap Auto, BCF, and Rebel) would sharply drop off as borders reopened. [1, 2]
The 2025–2026 Normalisation: Earnings compression coupled with a resilient stock price pushed the P/E back up into the mid-15s, reflecting a stabilizing outlook for discretionary retail. [1, 2]

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For Super Retail Group Ltd (ASX:SUL), historical annual data indicates that the Return on Invested Capital (ROIC) has generally tracked above its Weighted Average Cost of Capital (WACC) over the multi-year cycle, reflecting historical economic value creation, though trailing metrics show recent compression with a WACC around 7.9% to 10.2% and an ROIC hovering near or below these cost thresholds depending on the exact trailing calculation window. [1, 2, 3, 4]

Capital Returns Overview

Current WACC: Estimated between 7.9% and 10.2% (with a 10-year median benchmark near 9.06%). [1, 2, 3]
Current ROIC: Trailing metrics show short-term compressed or negative prints near -0.65% to 10.12% depending on normalized adjustments and lease accounting standards (such as AASB 16). [1, 2]
Historical Spread: Over the past decade, solid earnings from core brands (Supercheap Auto, Rebel, BCF, and Macpac) allowed SUL to keep long-term returns on capital above hurdle rates during stable retail periods, though consumer discretionary headwinds have compressed the spread recently

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More buffett analysis

As of late 2026, Super Retail Group Limited (ASX: SUL) continues to showcase robust but cyclically softening efficiency metrics. [1, 2]

Its current Return on Equity (ROE) sits at approximately 15.7% to 16.0%, which ranks comfortably ahead of most cyclical retail peers. [1, 2, 3]

An analysis of SUL's historical ROE trends against Warren Buffett's foundational capital allocation principles reveals how the owner of Supercheap Auto, rebel, BCF, and Macpac creates value. [1]

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1. Historical ROE Trends: The 10-Year Trajectory

Super Retail Group has proven to be a highly consistent compounder over the long term, though it is subject to the consumer discretionary cycle. [1, 2]

The 10-Year Median: SUL’s 10-year mean/median ROE hovers between 16.8% and 17.1%. This structural level indicates an economically resilient business model with strong brand equity across its specialty retail segments. [1, 2]
The Pandemic Spike: SUL reached a multi-year ROE peak in late 2020 / early 2021 (touching over 24% annualized in specific periods) due to unprecedented pandemic-induced domestic demand for outdoor leisure (BCF) and auto DIY (Supercheap Auto). [1]
Recent Softening (2024–2026): Over the last two fiscal years, ROE compressed slightly to its current ~15.8% mark. This drop stems from compression in net profit margins. While group revenue has scaled up past $4.1 billion, aggressive promotional activity alongside rising rent, supply chain investments, and wage inflation have driven underlying profits down. [1, 2, 3, 4, 5]

The DuPont Warning: SUL's trailing ROE is structurally supported by financial leverage. With an equity multiplier that expands a 6.6% Return on Assets (ROA) into a 15.7% ROE, a significant portion of shareholder returns is amplified by its debt and lease structure. This is highlighted by a lower Return on Invested Capital (ROIC) of 10.18%. [1, 2, 3, 4]

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2. SUL vs. The Warren Buffett Benchmarks

Warren Buffett uses specific criteria to judge whether corporate managers act as rational capital allocators. SUL’s financial architecture matches up to those rules as follows: [1]

Buffett Benchmark	Benchmark Requirement	SUL Performance & Metrics (2026)	Verdict
Minimum ROE Threshold	Consistently above 12% to 15% without relying on extreme, dangerous leverage.	~15.84% (10-year median: 16.87%).	Pass (Exceeds baseline, though leverage artificially inflates it).
The "One-Dollar" Retention Test	Every $1 of retained earnings must create at least $1 of market value over time.	Retained equity has expanded its intrinsic value (~$16.50–$17.90) well above its historical accounting book value.	Pass
Capital Deployment Strategy	Prioritize high-return internal projects; if none exist, return cash to owners.	Reinvests in modern supply chains and omni-channel tech. Excess free cash flow is distributed heavily via dividends.	Pass
Debt Conservatism	Prefers businesses that can clear long-term debt using less than 3–4 years of net earnings.	Total long-term debt is ~$1.08B vs ~$205M Net Profit. Net Debt/EBITDA is higher at 2.54x.	Borderline (Higher leverage due to capitalized retail leases).

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3. Capital Allocation Evaluation

Buffett prefers companies that generate strong free cash flow and distribute what they cannot deploy at high rates of return. SUL manages this balance cleanly:

High Payout Ratio: SUL features a high dividend payout ratio of 77%. This means management acknowledges that specialty retail has a ceiling for organic expansion. Rather than burning cash on low-ROI acquisitions, they return cash to shareholders via a ~5.2% fully franked dividend yield. [1, 2, 3]
Disciplined M&A: Buffett values sticky, defensive moats. SUL's historical acquisitions—Rebel Sport (FY12) and Macpac (2018)—established dominant sector positions. Rather than over-expanding internationally, they have focused on extracting domestic supply chain efficiencies. [1, 2]

Summary Verdict: From a Buffett lens, Super Retail Group is a well-run operation with durable brand positioning. However, the Oracle of Omaha would likely flag the structural margin compression from inflation and the company's reliance on balance-sheet leverage to keep its ROE above the 15% mark.

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