Whether it applies specifically here or not, there is often a common mistake among big retailers: pushing for growth beyond what is reasonable. And shareholders are likely wrong to expect a large, mature retailer to consistently deliver much more than system-level growth over any meaningful timeframe imo.

Of course, growth is good! We want profits to march higher as that ultimately drives share prices. But what matters most is sustainable growth, the kind resulting from an attractive return on investment. Without that you’re just eroding equity.

Achieving this is difficult when you already hold the lion’s share of your market. The options are usually limited to acquisitions and offshore expansions, which are generally pretty risky. Or operational optimisation ie.enhancing productivity to squeeze more profit out of every unit of sales. And you can get a long way on this front, but its generally a slow grind and you can score some own goals if the focus is too myopic. Cutting service levels or inventory or product quality etc might offer immediate cost savings and a temporary margin boost, but it eventually compromises brand reputation.

For me, the priority for mature retailers should be resilience. Nurturing the brand and maintaining a rock-solid balance sheet is everything. Sales, margins, and profits will always ebb and flow with the economic cycle. However, if you maintain a compelling value proposition and can weather the lean years, you’ll likely reward shareholders over the fullness of time. Not in a NVIDIA kind of way, obviously, but certainly more than you'll get by being a little too cute with "strategic growth initiatives".

We’ve owned Super Retail Group for a number of years. It makes up less than 1% of our SMSF portfolio now. It’s been a reasonable investment for us, and lots of BCFing fun along the way!

Our cost price was $8.30 and it’s paid a 5-6% fully franked dividend (7-8% gross yield). However, I think it is struggling to grow now and EPS has declined in recent years. Analysts are forecasting a mere 6% growth. ROE is still reasonable at 17%.

I would add some around $12.50 if it fell that low. At that price it could provide an annual return of approx 12%. It’s a hold for me at the current price. I think there are better retailers with superior growth prospects. Universal Stores springs to mind. I’m expecting 16-17% growth from UNI and a 5% fully franked dividend. Just recently the share price dipped to $7.80. I think this was a good opportunity to add a few.

Yes @Strawman retail is hard...really hard. It's a simple enough business model - buy the right stuff from suppliers, add a margin, and sell it in your retail stores. But it's not easy, as many costs are high (think Westfields ratcheting up rents every year...), consumer tastes change, keeping great sales staff is tricky as they are easily poached and the barriers to entry are low, meaning a steady flow of new competition over the years.

I do invest in retailers from time to time and think I understand it well as my career industry. I would not currently own AX1 or SUL, as both have had major CEO problems in the past couple of years and passenger, complicit Boards, hence the chances of them being at the top of their games right now and doing the store level details better than competitors becomes lower.

Both have some great brands and real estate, so they could bounce back with better leadership again but it's not a hurdle I need to jump over at this point. Give me a Costco (at the right price) or a Dino Polska (compounding founder led Polish grocer), over the local options at present...

Two brilliant retail role models mentioned there @Karmast and their business models are simple, easily explainable and ruthlessly executed. More evidence of ‘the people follow the system and the system operates the business’