Rebel has faced a tough December, with investment banks scrambling to confirm whether the sporting retailer’s margin slip at the end of the first half is a one-off event or something more sinister.
Financial analysts at Citi told investors in a note last week that direct-to-consumer brands in Australia stepped up discounting in December, with Rebel jumping on the bandwagon. This, in turn, dragged on earnings for the Super Retail Group subsidiary.
In the first half of FY26, the sporting retailer’s profit before tax (PBT) was $53 million, down by $7 million compared to the first half of FY25.
Citi analysts added that Rebel’s earnings before interest and tax (EBIT) appear to be around 15 to 20 per cent below consensus. They further claimed that weaker seasonal sales in apparel led to clearance activity at the end of the first quarter of FY26.
“A step-up in discounting activity by brands in the DTC channel during December was mostly matched by Rebel, leading to considerable gross margin decline,” the investment bank added.
“It’s difficult to know if this is a one-off event in response to elevated stock levels of the brands or a lift in competitive intensity.”
Despite this slip in Rebel, Citi still retains its buy rating on Super Retail Group stock (ASX: SUL), with a slightly trimmed 12-month target price of $18.70. SUL’s current share price as of writing is $14.57 (19/01, 4pm)
The investment bank’s reasoning shows that Super Retail’s overall group sales of around $2.2 billion was in line with market expectations, and around 1 per cent below Citi’s projections. Outdoor wear brand Macpac was the standout, posting a 13.1 per cent lift in sales, with the potential of the stores showing through following a pause in the rollout according to Citi.
“While today’s earnings downgrade was disappointing, we are cautious not to overreact to what may be mostly temporary factors,” the investment bank noted. “We wait for further commentary from management at the upcoming 1H26 result on 26 February to clarify these issues.
“Downside risk appears somewhat limited considering the net cash balance sheet, exposure to the appreciating $A and depressed earnings multiple (13.3x FY26e EPS).
This all comes as retail business confidence plunged in December according to new Roy Morgan data.