Ampol’s 2Q25 trading update showed improving margin performance across the majority of its segments. Refinery margins in diesel have lifted globally and its convenience operations in Australia & NZ are seeing improving fuel margins. While conditions are good, the EBIT momentum is in line with our thinking.

Australian inflation for the June 2025 quarter has dropped further to 2.1%. In retail categories, the rate of price inflation has remained largely unchanged overall. However, there are a number of sub-sector distinctions of note. Packaged grocery inflation ticked up in the June quarter and electronics deflation eased. Hardware prices are now in decline, pharmacy prices have flat-lined and sporting goods are in deflation too.  The direction of retail inflation is likely to be lower over the next 12 months, helping affordability, but hurting retail sales growth. The benefit of lower inflation on interest rates is positive for retail outlook, but we view the magnitude of the impact as over-hyped. We expect retail sales growth to improve to 3.9% for FY26e, up from 3.3% in FY25.

Australian retail sales finished fiscal 2025 with 4.6% growth for June 2025, the strongest growth in over two years. The standouts were online, recreational goods, pharmacy, cosmetics and electronics. Liquor, cafes & restaurants and supermarkets were all laggards. The strong finish to the year partly reflects end of financial year sales. Retail spending for FY25e was up 3.3% and we see 3.9% growth for FY26e.

The link provides a presentation associated with a webinar we held. The webinar addressed our retail sales forecasts for FY26e. The outlook remains constructive for retail spending in FY26e, interest rates are falling and tax cuts are providing stimulus for households, but population growth is slowing and income growth may not rise further from here. We assessed the willingness of consumers to dip into savings to drive retail spending higher.  

Australian retail sales growth has been on an improvement path since March 2024. Retail sales growth for FY25 was 3.3%, better than the 1.8% in FY24. We see retail spending accelerating further to 3.9% in FY26e. Why not a stronger improvement given interest rate cuts? Given tax cuts and strong wages growth during FY25, income growth will actually slow in FY26e making it hard to see much acceleration in retail sales. If retail growth is stronger than our forecast in FY26e, it is likely driven by households dipping into savings if house prices rise substantially.

We initiate coverage on Noumi, an Australian fast-moving consumer goods company specializing in the production, marketing, and distribution of dairy and plant-based beverages, nutritional products, and functional ingredients. Noumi has state-of-the-art facilities for the production of UHT and plant-based milk products with capacity to service export market growth opportunities. There is upside potential from new product development and improved yield efficiency.

Australian retail sales rose 4.1% in May 2025 year-on-year. This is an acceleration on the combined March-April growth of 3.6%. Foot traffic data for May reported growth of 8%. Pharmacy, beauty, recreational goods and online were strongest in May. Weaker categories were liquor, cafes & restaurants and furniture, albeit all were positive in the period.

Treasury Wines updated segment disclosure and perspectives on FY26e should provide relief that earnings will still grow in FY26e and the Board sees its shares as under-valued. The new segmentation shines a very bright light on the appeal of luxury wines and the challenge in commercial wines. Luxury wines accounts for 23% of Treasury’s volume and 86% of the group’s earnings. While the outlook for FY26e has been tempered a little, there are downside risks in Chinese demand and US distribution changes in our view.

Metcash reported FY25 EBIT up 2% and adjusted for acquisitions, earnings were down 4%. Hardware had a challenging year but there are signs of a recovery emerging. We forecast Hardware EBIT growth of 8% in FY26e. In its Food segment, Superior Foods and convenience will more than offset tobacco declines in FY26e and Liquor has a contract win. We

Woolworths has had a rough FY25 for a range of reasons. However, looking forward, we are more interested in the company’s strategic direction under CEO Amanda Bardwell. We expect more details in coming months that may lead to further “simplification” or cost savings and decisive action on underperforming businesses like Big W, HealthyLife and Marketplus. Woolworths is also likely to double-down on its core proposition as “the fresh food people”. In this report, we assess the extent of any potential strategic shift by Woolworths and the implications for the broader industry. As Woolworths recovers, others will feel the impact.