Accent Group’s trading update showed deteriorating sales trends, with comparable sales turning negative since March 2025. As a result, 2H25e EBIT will be down 23%. We expect sales growth to be below cost growth again in FY26e resulting in EBIT of $102 million, down 7%. The concern is Skechers is mature and Platypus may decline. With issues in portions of the core business, execution risk is elevated. Positive comp sales are essential in a high cost growth environment and will need to recover to offset the growth in wages and rents.

Treasury Wines has provided an update on FY25e earnings and noted that its US distributor in California will exit the state. The loss of RNDC will be a short-term risk given the short-term timeframe of September 2025. We have a cautious outlook on the US business with EBITS ex DAOU down 24% in FY26e.

We initiate coverage on Ampol at a time when convenience sites are executing well with upside from a better sales mix and more foodservice offerings. In the next two years the company should also experience a substantial lift in profitability in its fuels businesses as throughput recovers and capital projects are completed.

The Myer strategy day gave a clearer view of the business in its current form and addressed many initiatives to drive improvement. Strategies previously outline are on track to be delivered in FY27e. There are several initiatives underway with no long-term targets provided yet. As Myer delivers on initiatives we expect to hear more on targets.

The Fair Work Commission has announced a minimum wage increase of 3.5% for FY26e. With a further 0.5% increase in superannuation payments, retail wage rate growth will be 4.0% in FY26e. This will be challenging for most retailers to offset given sales growth is likely to be 2%-3%. The retailers with the biggest challenge include Woolworths, Coles, Accent Group and Bapcor.

The National Accounts results make for stimulating reading for consumer-facing businesses because household income growth has accelerated at the same time as cost of living pressures have eased. Financial conditions are good. The March 2025 quarter showed household income growth of 6.7% with consumer spending rising 4.2%. Households are now saving 5.2% of their income. The dilemma in our mind is whether conditions accelerate from here. We expect the rate of retail sales growth, currently trending at 4%, to persist over the next 12 months. While interest rate cuts will help, a slowdown in population and lapping the income tax cuts means income growth is actually likely to slow a little, making it hard to see an acceleration in retail sales growth.

Wesfarmers’ strategy sets an expectation for high-single digit earnings growth. However, the reality will still be some way off given growing losses in lithium. There is little room for any competitive risk to Bunnings or Kmart and a lot priced in for growth from these businesses that account for over 85% of enterprise value. Wesfarmers’ strategy continues to shift towards a focus on organic growth. There are opportunities in new product categories for Bunnings and Officeworks, retail media, online marketplaces and production expansion for WesCEF. The message around acquisitions was intriguing – plenty of desire, few viable options.

Australian retail sales rose 4.0% in April 2025 year-on-year. The March-April period has been distorted by the shift of timing of Easter over the past two years. Therefore, the combined March-April results are more relevant and show retail sales growth of 3.6%. The strongest areas are online, pharmacy, beauty and recreational goods. The weakest areas remain liquor, cafes & restaurants and department stores.

Treasury Wine’s share price suggests there is downside risks to consensus earnings. We agree and the opportunity for incoming CEO Sam Fischer will be a reset of expectations because the fundamentals of the business are solid. Treasury has repositioned its portfolio towards luxury wines where Chinese and global demand are both strong.

The Australian grocery industry has returned to sluggish growth with challenges in both top-line sales growth and bottom-line cost pressures.  This chart pack addresses the risks and opportunities ahead for the Australian grocery industry. The presentation has three sections. 1) Consumers have more money to spend but will remain budget-conscious. 2) Retailers are struggling to deliver sufficient growth. 3) Volumes are weak, so where are the opportunities?