First half profit before tax (PBT) for Super Retail of $200-203m, exceeded forecasts by consensus and Morgan Stanley of $172.5m and $174.1m, respectively, supported by gross margin expansion.

Group like-for-like sales growth of 1% was in line with consensus expectations.

However, management noted a "constrained retail trading environment" in Q2 with signs of a weaker consumer emerging. Also, the cost of doing business (CODB) metric is still under pressure from rising wage, rent and utilities costs.

Equal-weight rating. Target $11.50. Industry view is In-Line.

Sector: Retailing.

Target price is $11.50.Current Price is $15.81. Difference: ($4.31) - (brackets indicate current price is over target). If SUL meets the Morgan Stanley target it will return approximately -37% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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