Super Retail Group's trading update was strong, as expected by Morgans, with total like-for-like sales growing by 25% in the first 17 weeks of FY21. 

The opening up of Melbourne, and a Christmas without the ability to head offshore, sets the scene for a further acceleration of sales trends in the broker's view.

The analyst highlights the group gross margins are up 200 basis points on the previous corresponding period, primarily due to reduced promotion activity (particularly in Rebel) and tight inventory. It's considered the continuation of tightly controlled costs will realise strong operating expense leverage in the first half.

The Add rating is maintained. The target price is increased to $12.59 from $11.53.

Sector: Retailing.

Target price is $12.59.Current Price is $11.70. Difference: $0.89 - (brackets indicate current price is over target). If SUL meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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