It looks set to be a disappointing end to the week for the S&P/ASX 200 Index (ASX: XJO). In late morning trade the benchmark index is down a sizeable 1.5% to 5,961.7 points.

Four shares that are falling more than most today are listed below. Here’s why they are tumbling lower:

The AMP Limited (ASX: AMP) share price has crashed 12% lower to $1.48 after providing an update on its expectations for the first half of FY 2020. The embattled financial services company expects to report underlying profit for retained businesses in the order of $140 million to $150 million. This was below the market’s expectations and due to a range of negative factors including market volatility and a credit loss provision in AMP Bank.

The FlexiGroup Limited (ASX: FXL) share price is down over 5% to $1.26. This follows the release of an update on its FY 2020 results. FlexiGroup expects to report a cash net profit after tax of $29 million. This is down 61.9% from $76.1 million a year earlier. Some of this decline is due to a macro overlay provision of $31 million post tax. This relates to the projected impact of economic conditions due to the pandemic.

The Marley Spoon AG (ASX: MMM) share price is down 5.5% to $3.26. This appears to be down to profit taking after a sensational gain on Thursday following its second quarter update. During the quarter the global subscription-based meal kit provider experienced a surge in demand due to the pandemic. This led to the company reporting second quarter revenue of 73.3 million euros, which was a massive 129% increase on the prior corresponding period.

The Origin Energy Ltd (ASX: ORG) share price is down 4% to $5.40 following the release of its fourth quarter update. The energy company revealed a 5% decline in full year Integrated Gas revenue. Although it achieved increased production, this was offset by fewer purchases, gas inventory movements, a higher proportion of spot LNG sales, and lower domestic prices. Energy Gas sales fell 4% to $259.2 million for the year.

More reading

• FlexiGroup share price sinks 7% lower on disappointing FY 2020 update
• AMP share price on watch following first half profit guidance
• Results: Marley Spoon share price surges 40% on market update
• Why Afterpay, Fortescue, Marley Spoon, & Splitit shares are racing higher
• Marley Spoon share price on watch after 129% jump in Q2 revenue

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended FlexiGroup Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Prospa Group Ltd (ASX: PGL) share price sunk 15% at the open this morning after the online lender released its unaudited results. Prospa is forecasting lower growth over FY20 as well as making additional provision for credit losses due to the impacts of COVID-19. 

Prospa shares have since regained some of their losses to be trading 7.65% down at the time of writing.

What does Prospa do?

Prospa is an Australian online business lender. Customers can borrow up to $300,000 with a 10-minute application, with funding available in as little as 24 hours.

Prospa first listed on the ASX last year at an offer price of $3.78. The Prospa share price fell to 75 cents this morning but has since recovered slightly and is now sitting at 84 cents. 

What did Prospa report?

Prospa’s unaudited results show a material impact from the coronavirus-induced economic downturn. The lender reports its loan originations have decreased, while provisioning for credit losses has increased. Total loan originations were materially impacted in April and May, but did pick up meaningfully in June. 

Prospa provided 5,501 customers with COVID-19-related relief packages between 1 March and 31 May 2020. These were typically full deferrals of 6 weeks duration or partial deferrals for 12 weeks. Interest during the deferral periods was capitalised. 

The environment remains challenging for Prospa’s small business customers. As a result, the company has set aside a $20 million provision to take into account the impact of the COVID-19 pandemic. An additional $5.5 million is being written off following a review of loan book receivables. 

The above provisions have contributed to an expected earnings loss before interest, tax, depreciation, and amortisation (EBITDA) of $18 million to $22 million. Prior to these adjustments EBITDA was expected to be $4 million to $8 million for FY20. Revenue grew at an annualised rate of 10% over the 9 months to March. This slowed abruptly with the onset of the pandemic, meaning Prospa now expects its FY20 growth to be around 4%. 

What is the outlook for Prospa? 

Prospa says it is seeking to support its small business customers to rebuild and invest for the future. The company is an approved lender under the SME Guarantee Scheme. This scheme has been extended to 30 June 2021 by the Federal Treasurer to support small business recovery. Prospa continues to provide customer relief packages but reports the volume of customer support requests has returned to pre-COVID levels. 

Prospa says it adapted quickly to the challenge of supporting customers as they navigate this period of economic uncertainty. The company says it sees customers across all sectors planning for their recovery.

Prospa’s full-year results will be announced on 27 August. The Prospa share price is trading at 84 cents per share at the time of writing, which is down more than 80% on this time last year.

More reading

• Why AMP, FlexiGroup, Marley Spoon, & Origin shares are tumbling lower
• Telstra and 2 more ASX shares I’d like to buy with $5,000
• FlexiGroup share price sinks 7% lower on disappointing FY 2020 update
• Reliable ASX dividend shares still exist
• Osprey Medical inks new deal with GE Healthcare

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It’s an interesting time to buy ASX shares right now.

The August earnings season is almost upon us. That means we’ll get a good look at Aussie companies’ operations and their finances.

That also means we could see some big share price moves in the next month or so. While that can seem scary, there could be some potential buys right now by picking up shares that may surprise on the upside, come reporting season.

Here are a few ASX shares that I’d like to buy with $5,000 today.

3 ASX shares I’d like to buy with $5,000

First cab off the rank is Telstra Corporation Ltd (ASX: TLS).

The Telstra share price is down just 5.3% this year, but could be good value in my opinion.

The obvious concern is around the NBN and potential impact on long-term earnings. However, I think Telstra’s leadership in the 5G network space could help offset that.

Of course, investors are already pricing that into the share’s current $3.35 valuation. But with the coronavirus pandemic clouding growth and earnings expectations, it’s worth watching Telstra next month.

The Aussie telco has historically been a strong ASX dividend share. It’s currently yielding 2.99% but that may change after August.

A spike in demand thanks to working from home arrangements may boost earnings. Either way, I think we could see more volatility in the Telstra share price this August.

Telstra aside, I also like the look of Saracen Mineral Holdings Limited (ASX: SAR).

The ASX gold share has already rocketed 78.85% higher in 2020 thanks to record gold prices.

Gold prices have surged since March as investors were spooked by the bear market and sought out ‘safe haven’ assets. So the big question is just how good the August earnings result will be for Saracen.

It may not be a cheap buy at $5.92 per share, but I wouldn’t bet against ASX gold shares in 2020.

Finally, I think a broad market index fund could be a good place to invest $5,000.

A passive fund like BetaShares Australia 200 ETF (ASX: A200) could be a good option. This BetaShares ETF seeks to track the S&P/ASX 200 Index (ASX: XJO) with a management fee of just 0.06% p.a.

If you want to invest in ASX shares but don’t have a targeted view on which industries, a broad market ETF could fit the bill.

Foolish takeaway

These are just a few ASX shares that I’d like to buy right now. Of course, it’s important for investors to consider the overall portfolio fit and investment horizon before buying in.

More reading

• A top ‘coronavirus share’ to buy this August
• 5 things to watch on the ASX 200 on Friday
• Coles and Wesfarmers share prices reach for new highs. Should you invest?
• ASX 200 rises 0.75%, Fortescue impresses and Macquarie remains robust
• 3 underperforming ASX 200 stocks that could beat earnings expectations

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The FlexiGroup Limited (ASX: FXL) share price is sinking lower on Friday following the release of an update on its FY 2020 expectations.

At the time of writing the financial services company’s shares are down 7.5% to $1.23.

What did FlexiGroup announce?

For the 12 months ended 30 June 2020, FlexiGroup’s transaction volumes reached $2.5 billion across its continuing products. This represents a 16% increase on the prior corresponding period.

Despite this solid volume growth, the company expects to report a sharp decline in its cash net profit after tax.

FlexiGroup’s unaudited FY 2020 cash net profit after tax is expected to be $29 million, down 61.9% from $76.1 million a year earlier.

Some of this decline is attributable to a macro overlay provision of $31 million post tax. This relates to the projected impact of economic conditions due to the COVID-19 pandemic.

Excluding this provision, the company’s cash net profit after tax would be down 21.1% year on year to $60 million.

One positive was that its bad debt ratio has remained stable. The company has taken a proactive and supportive approach to assist its customers following the bushfires and during the pandemic. These actions have helped deliver unaudited net losses/average net receivables performance of 4.1% in FY 2020. This compares to 4.2% a year earlier.

COVID-19 provision.

The company’s Chief Executive Officer, Rebecca James, explained that the COVID-19 provision was the prudent thing to do.

She said: “The increased macro overlay provision is a necessary and prudent step as we continue to manage the continued economic uncertainty as a result of COVID-19. What’s particularly reassuring is that despite the significant economic headwinds experienced this year for both the business and our customers, we’ve continued to manage the portfolio in a prudent way.”

Humming along.

FlexiGroup’s chair, Andrew Abercrombie, spoke positively about its humm platform, which rivals Afterpay Ltd (ASX: APT) and  Zip Co Ltd (ASX: Z1P) in the buy now pay later market.

He commented: “This is a strong result, which has seen humm become the only BNPL product which has produced both profits and growth in exceptionally challenging economic circumstances. Balance sheet debt was also reduced during the period notwithstanding the growth in the business.”

“The successful execution of our transformation strategy by the Management Team over the last twelve months has seen flexigroup become one of the largest interest free instalment providers in Australia and New Zealand, with 2.1 million customers and 56,000 merchants,” he added.

Mr Abercrombie appears optimistic on the company’s prospects in FY 2021.

He concluded: “The record customer and retailer numbers experienced over the course of FY20 also put flexigroup in a strong position heading into FY21, supporting future volume growth across our products.”

More reading

• Why AMP, FlexiGroup, Marley Spoon, & Origin shares are tumbling lower
• These are the 10 most shorted shares on the ASX
• 3 exciting ASX growth shares to buy and hold
• Why Catapult, Eclipx, FlexiGroup, & Whispir shares are charging higher
• FlexiGroup share price jumps 8% higher following BNPL update

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended FlexiGroup Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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People enter share investing for a range of reasons. Some investors chase high growth and are willing to accept the risk that comes with that. Others look for steady increases in share prices over time. However, many try to combine incremental share price increases, with reliable income, or dividend payments. This is the path that I prefer to take when I can. I do heavy research to find solid ASX dividend shares that are selling cheaply and offering reliable dividend payments.

If you buy these types of shares at a low price, then your personal dividend yield is higher. For example, Fortescue Metals Group Limited (ASX: FMG) currently pays a trailing 12 month dividend yield of 5.9% based on today’s price of $17.36. However, if you paid, say, $8.68 or half the current price, then your personal dividend yield would be 11.8%. That is an outstanding result in anybody’s book. It is very hard to get 10% reliable returns with mid-level risk.

Reliable ASX dividend shares

One thing I’ve learned throughout my investing journey is that everything carries a level of risk. For example, banks have always been considered reliable dividend shares. However, during the coronavirus pandemic, I learned that the Australian Prudential Regulation Authority (APRA) can tell the banks not to pay a dividend. If a third party can mandate whether my investment pays a dividend or not, that is an additional risk. This had never entered my mind prior to the pandemic.

The reality today is that dividend paying shares are changeable, and require active management. For instance, yesterday Rio Tinto Limited (ASX: RIO) declared the largest dividend payment in its history. This is because China, our largest iron ore customer, is actually a net importer of steel. This means that the millions and millions of tonnes we export to China each year are not enough to meet its needs.

If this changes, then the dividend equation also changes.

Real estate is another sector known to be a strong dividend payer. Nonetheless, this year we saw REITs with a strong exposure to either residential or retail properties suspend dividends due to coronavirus impacts. For example, retail focused REIT, Vicinity Centres (ASX: VCX) suspended its dividend payment on 1 June. Likewise, GPT Group (ASX: GPT) also withdrew guidance on 19 March. 

In contrast, office or commercial focused REITs have not. Centuria Office REIT (ASX: COF), for example, went ex-dividend on 29 June. As with iron ore miners, the clue here is to understand the underlying business. If the market is telling you to change, then you should change.

2 alternative ASX dividend share options

The companies below cover a range of funds that also pay good dividends, are relatively stable, and are presently priced relatively low. 

Infrastructure funds

One of the newer infrastructure funds that interests me is New Energy Solar Ltd (ASX: NEW). This fund acquires, owns and manages large-scale solar generation facilities. It interests me firstly, because it doesn’t build these facilities for somebody else. Therefore, it has more of an annuity, or recurring style revenue stream. All 16 of the company’s solar plants are presently in operation across Australia and the United States. So it is basically an electricity generator with very low operating costs.

Secondly, and most importantly for any share investing, are the economic factors. New Energy is selling at a price to book ratio of 0.68. This means it is selling at approximately 32% lower than its net tangible asset value. At this price, the company has a trailing 12 month dividend yield of 6.8% which I think is very respectable. I believe that, over time, the share price will grow, but it isn’t going to see explosive growth, making this a good entry point. 

Self storage

Abacus Property Group (ASX: ABP) is ostensibly an REIT with 50.6% in office buildings, 34.4% in storage space, 6.8% in small convenience shopping centres, and about 8.2% in non-core assets. However, for me it is the 34.4% storage space I find interesting. Competing for corporate tenants in the office sector requires significant value add. In fact, in order to attract and keep good clients, there is both an initial and an ongoing expense. 

Yet with self storage, this is vastly reduced to low level sustaining costs only, i.e. repairs, security, minor admin and making sure everything works. Abacus has begun to show a growing interest in accumulating storage assets. Recently it increased its holding in rival National Storage REIT (ASX: NSR) to 8.09%. Like New Energy Solar above, this moves more of the company’s revenues into the annuity or recurring business model. 

Importantly, Abacus has a price to book ratio of 0.77 at the time of writing. Like New Energy, one could hypothetically buy the entire company and sell its assets for a profit. Abacus currently has a trailing 12 month dividend yield of 6.95%.

Foolish takeaway

The coronavirus has turned many long-standing investing beliefs on their heads. For example, companies we used to think of as solid ASX dividend shares have found themselves either restricted from paying, or totally unable to pay. The lesson here for me has been that income investors also need to be active investors. Moreover, share investing for income requires a good understanding of the sector dynamics, and making sure that you are buying a company at a good entry price. 

More reading

• Is the Fortescue share price too expensive?
• Why Fortescue and these ASX 200 shares are at record highs
• 2 top ASX shares to buy for reporting season
• ASX 200 rises 0.75%, Fortescue impresses and Macquarie remains robust
• 3 latest ASX 200 stocks to be downgraded by top brokers today

Motley Fool contributor Daryl Mather owns shares of Centuria Office REIT and Fortescue Metals Group Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Yesterday morning, Osprey Medical Inc (ASX: OSP) announced a strategic alliance with US giant GE Healthcare. The Osprey share price started trade yesterday strongly in response to the news before retreating to 4.4 cents per share at Thursday’s close. 

What did Osprey announce?

Under the new agreement, GE Healthcare will exclusively distribute Osprey’s products in Europe, Asia, Russia, Turkey, the Middle East, Africa and Central Asia.

The announcement reports that Osprey’s DyeVert contrast minimisation devices will complement GE Healthcare’s X-ray contrast media. Together, the technology will assist doctors in addressing the rising problem of acute kidney injury (AKI) following interventional coronary angiograms in patients with chronic kidney disease.

Osprey’s technology is the only FDA-cleared medical device approved for reducing patient contrast exposure.

The 4-year agreement will see GE Healthcare commercialise Osprey’s DyeVert portfolio. On average, the DyeVert technology reduces the amount of contrast that reaches the kidney by 40%, without reducing the image quality.

A word from management

In regard to the new alliance, Osprey CEO Mike McCormick said:

We are pleased to be partnering with GE Healthcare to be commercialising our products in global markets to address the rising problem of AKI following heart imaging procedures in patients with poor kidney function.

CEO of GE Healthcare’s pharmaceutical diagnostics business Kevin O’Neill stated:

GE Healthcare and Osprey share a similar goal in improving patient outcomes. Both our product portfolios and educational efforts, which are aligned wit cardiology guidelines for AKI minimisation, offer interventional cardiologists the opportunity to safely image patients by reducing the risk of AKI.

Quarterly report highlights

On Tuesday, Osprey released its quarterly cash flow report for the period ending 30 June 2020.

The company reported a successful capital raising of $12.8 million from its entitlement offer and shortfall placement, and an additional $1.9 million from the US Government in the form of a pandemic recovery loan, a COVID-19 relief program for small US-based companies.

Additionally, Osprey reported a 7% fall in unit sales, due to COVID-19’s impact on its worldwide heart procedures. However, as at 30 June, the company still maintained a cash balance of $14 million.

About the Osprey share price

After a strong initial start to the day on Thursday, rising more than 6%, Osprey’s share price retreated.

The stock closed the day flat, trading for 4.4 cents, where it remains at the time of writing. Year-to-date, the Osprey share price is up 46.7%.

More reading

• CLINUVEL share price races higher on Q4 update
• Is the Fortescue share price too expensive?
• Super Retail share price rockets after surprisingly strong FY 2020 performance
• Is this your last chance to buy Altium shares for a good price?
• 3 quality ETFs I’d buy for my portfolio

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The CLINUVEL Pharmaceuticals Limited (ASX: CUV) share price is racing higher on Friday after the release of its fourth quarter update.

At the time of writing the pharmaceutical company’s shares are up 4% to $23.26.

How did CLINUVEL perform in the fourth quarter?

During the fourth quarter of FY 2020, CLINUVEL recorded cash receipts of $10.4 million. While this was almost double the cash receipts of $5.37 million it achieved in the prior quarter, this was largely down to seasonal factors.

The company’s SCENESSE product is used to treat erythropoietic protoporphyria (EPP), a disease that causes itching, burning, and scarring of the skin on contact with sunlight. Given that the company has a focus on the Northern Hemisphere market, its sales are strongest during its spring and summer periods.

In comparison to the prior corresponding period, cash receipts actually declined 20% from $13 million.

Management notes that many of the countries in which CLINUVEL operates are still experiencing lockdowns and disruptions to daily life and commercial operations. This led to some clinics either deferring orders or reducing order sizes in the initial months of the COVID infections.

Nevertheless, despite the lower cash receipts, the company generated positive cash flow for the quarter. Net cash flow for the quarter came in at $7.2 million, lifting its cash and equivalents on hand by 7% over the quarter to $66.75 million.

Demand largely unaffected.

CLINUVEL’s Chief Financial Officer, Darren Keamy, revealed that demand remained strong despite the pandemic.

He said: “Against the global economic contraction, CLINUVEL is best positioned to invest in its planned growth and expansion, and patient demand for treatment has been largely unaffected, a testament to the impact of EPP on patients’ lives and their need for ongoing treatment.”

“Looking back, we have had a clear, long-held, view on how to optimise our resources and prepare for adverse economic conditions. By maintaining a strong cash position, we are able to respond to changes quickly and nimbly, limiting the need to return to investors to access capital and allowing us to focus on the long-term growth of the Group,” Mr Keamy said.

More reading

• These are the 10 most shorted shares on the ASX
• These are the 10 most shorted shares on the ASX
• ASX 200 jumps 1.3%: Big four banks drop lower, Afterpay up after U.S. update
• Here are the 10 most shorted shares on the ASX
• These are 10 most shorted shares on the ASX

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Fortescue Metals Group Limited (ASX: FMG) share price has been a big success story in 2020.

Shares in the Aussie iron ore miner have rocketed 61.2% higher this year. Many would point to a surging iron ore price as the key factor.

However, shares in rival miner BHP Group Ltd (ASX: BHP) have actually fallen this year. So, what’s going on with the Fortescue share price and is it too far gone to buy?

Why Fortescue’s value is surging

The Fortescue share price climbed a further 4.3% higher yesterday and hit a new record high of $17.55 per share.

That came after the Aussie miner beat its upgraded export target and said it can maintain that in the year ahead.

Fortescue shipped 47.3 million tonnes in the last quarter and 178.2 million tonnes for the year. That smashed expectations and saw the miner’s shares soar higher.

After yesterday’s performance, Fortescue is fast becoming one of the hottest ASX shares on the market this year. 

Is the Fortescue share price too expensive?

Despite trading at an all-time high, Fortescue’s price-to-earnings (P/E) ratio is surprisingly low.

The Aussie iron ore miner trades at a 7.8 multiple which is nearly half that of BHP (14.6). Granted, Fortescue is more of a pure-play iron ore miner compared to BHP which has significant other interests like petroleum.

But with strong growth forecasts for the year ahead and high iron ore prices, a P/E of 7.8 seems remarkably cheap.

One factor that does weigh on Fortescue is its iron ore quality. Fortescue sells ore with a lower purity compared to its rivals which means it does fetch a lower price.

However, I still think that it could be a good value buy given what the relative valuation metrics are saying right now.

Given the strong success this year, I think many investors would be hoping for a tasty dividend in the company’s August results.

That would be great news for investors particularly in the current market where ASX dividend shares are hard to find.

What other shares are there to watch in August?

I think all of the top performers in 2020 are worth watching. That means I’d include A2 Milk Company Ltd (ASX: A2M) and Afterpay Ltd (ASX: APT) as ‘must watch’ ASX shares in August.

More reading

• Why Fortescue and these ASX 200 shares are at record highs
• ASX 200 rises 0.75%, Fortescue impresses and Macquarie remains robust
• ASX 200 jumps 0.7%: Fortescue impresses, Macquarie’s tough Q1, big four banks rise
• Why Afterpay, Fortescue, Marley Spoon, & Splitit shares are racing higher
• Fortescue’s share price in focus as it beats guidance on record quarterly shipments

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk and AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In morning trade on Friday the Super Retail Group Ltd (ASX: SUL) share price is storming higher. This follows the release of an update on its expectations for FY 2020.

At the time of writing the retailer’s shares are up 12% to $9.07.

How did Super Retail perform in FY 2020?

Super Retail revealed that its sales rebounded strongly during final quarter following the easing of COVID-19 restrictions.

Following a 26.2% decline in monthly like-for-like sales in April, monthly like-for-like sales increased by 26.5% in May. Pleasingly, this positive trading momentum continued in June with an increase in monthly like-for-like sales of 27.7% compared to the prior corresponding period.

As a result, Super Retail recorded like-for-like sales growth of 3.6% and total sales growth of 4.2% in FY 2020. Total revenue is expected to be approximately $2.82 billion.

What were the drivers of its sales growth?

The Supercheap Auto business was the star of the show in FY 2020. It recorded a 6.3% increase in like-for-like sales and a 7.6% jump in total sales.

This was supported by its Rebel business, which delivered like-for-like sales growth of 2.7% and a 3.3% increase in total sales.

Also performing positively was the BCF business. It delivered 3% like-for-like sales growth and a 4% lift in total sales.

Management advised that these businesses benefited from a significant uplift in domestic tourism and travel, personal fitness, and outdoor leisure activities.

However, not all of Super Retail’s businesses performed as positively. The Macpac business was out of form and recorded a 9.1% decline in like-for-like sales and a 5% reduction in total sales.

What about its earnings?

Super Retail expects its pro forma segment earnings before interest, tax, depreciation, and amortisation (EBITDA) to be between $327 million and $328 million in FY 2020. This compares to FY 2019’s segment EBITDA of $315 million.

Whereas pro forma segment earnings before interest and tax (EBIT) is expected to be between $235 million and $236 million. This will be an increase from $228 million in FY 2019.

And on the bottom line, pro forma normalised net profit after tax is expected to be between $153 million and $154 million. This compares to FY 2019’s net profit after tax of $153 million.

Management advised that these pro forma figures exclude one-off pre-tax abnormal items of approximately $54 million. These items include the remediation of team member underpayments, the exit of certain non-core businesses, support office restructure costs, and the accelerated write down of certain assets.

Super Retail Group CEO and Managing Director Anthony Heraghty said: “Given the volatile trading environment, we are very pleased with these results.”

“The Group’s omni-retail channel business strategy has enabled our businesses to adapt quickly to changing consumer behaviour during COVID-19 and delivered a resilient trading performance. We look forward to updating the market with further detail on our 2019/20 financial results at our full year results presentation,” he concluded.

More reading

• Should you buy ASX retail shares in July?
• What the latest economic data could mean for ASX 200 shares
• Is the Super Retail share price cheap today?
• ASX 200 down 0.5%: Sydney Airport and South32 updates, HUB24 delivers record Q4
• Why outperforming ASX retail stocks could be running out of puff

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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