Sports Direct’s entry into Australia, New Zealand comes at expense of Super Retail Group’s Rebel

British sporting goods giant Sports Direct’s entry into Australia is set to disrupt the nation’s $5 billion fitness retail market and will come at the expense of incumbent Rebel, according to a major analyst.

Announced last month, the tie-up between London-listed Frasers Group and footwear retailer Accent Group will see the initial roll-out of at least 50 Sports Direct stores in Australia and New Zealand over the next six years.

Morgan Stanley analysts on Wednesday said Sports Direct could succeed locally, given its parent company Frasers and Accent already have differentiated access to global brands like Nike, Adidas and Skechers.

As a consequence, they expect about 25 per cent of Sports Direct sales to come at the expense of Super Retail Group’s Rebel.

While the earnings impact was likely insignificant across the 2025 and 2026 financial years, Morgan Stanley sees a downside risk to consensus earnings in the 2027 to 2029 financial years as Sports Direct begins to scale.

They said the Sports Direct customer proposition would largely be on par with Rebel, albeit with a greater focus on private label.

“(Super Retail Group’s) risk profile had increased as they face greater competition in their two largest divisions, Rebel and Bunnings,” Morgan Stanley said in a note to clients.

“This comes at a time when margins across the group are under pressure given the challenging operating environment.”

Anthony Heraghty, chief executive of Super Retail Group - which also owns Super Cheap Auto and BCF - told analysts earlier this year he was not intimated by a bigger push from hardware giant Bunnings into the automotive sector.

The push follows the success of Bunnings’ move into pet goods and cleaning products.

Morgan Stanley has also revised its price targets for Super Retail Group from $13.47 to $12.20 driven by increased competition and earnings downgrades, and Accent from $2.70 to $2.50 given near-term earning dilution.

Shares in Super Retail Group closed up 1.1 per cent to $13.40 and Accent up 2.7 per cent to $1.90 on Wednesday.

Frasers is one of the world’s biggest retailers of sports, premium and luxury brands with more than 1500 stores in over 30 countries.

In the 2024 financial year, Frasers reported a revenue of £5.5b ($11.4b), with its UK Sports segment generating £2.9b in revenue across over 800 stores.

Accent has more than 900 stores — including The Athlete’s Foot, Platypus, Hype DC and Nude Lucy — in Australia and New Zealand.