2012 Media Releases

Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) has initiated coverage of large speciality retailer Super Retail Group (ASX: SUL) with a Hold recommendation.

Research analyst Jennifer Kruk said, “Super Retail Group is the market leader with a strong brand portfolio across the attractive auto and leisure categories. In addition, the company is supported by a solid track record of earnings growth across its 580 store network in Australia & New Zealand.

“The company has just completed its largest acquisition to date – Rebel Sport – which, in our view, is the key swing factor over the coming twelve months. We see strategic merit in Super Retail Group acquiring another market leader in a leisure-based category and believe there is significant opportunity to add value by driving sales growth, implementing supply chain improvements and improving supplier relationships.”

Given Super Retail Group’s track record of delivering growth through product and range initiatives, Deutsche Bank analysts’ sales assumptions for Rebel of 1.5% in 2012E and 3% in 2013E could prove conservative following the change in ownership.

Despite downside risks such as the potential need for Super Retail Group to invest in Rebel’s cost base and strong price competition from international online retailers, the company has outperformed the ASX Small Industries Index and its ex-100 retail peers, driven by a strong 1H12 trading update in January.

Kruk said “While we find Super Retail Group’s current valuation of 7.9 x 2013E EBIT relatively undemanding, we would like more visibility around Rebel’s earnings under new ownership and any impending lag between potential cost investment and sales growth as thus initiate coverage as a Hold.”

Super Retail Group is a specialty retailer with a specific focus on the auto and outdoor/leisure categories which listed on the ASX as the Super Cheap Auto Group in July 2004. Key brands include Super Cheap Auto (SCA), Goldcross Cycles (GX), BCF (Boating, Camping, Fishing), Ray’s Outdoors, FCO (Fishing, Camping, Outdoors), Rebel Sport and Amart All Sports (collectively Rebel). SUL stores stock a combination of its own-brand and branded products and operates in both Australia and New Zealand.

For further information, please contact:

Deutsche Bank AG    
Name : Amy King   
Phone: +61 (0) 2 8258 2505
E-mail: amy.king@db.com