Domino’s provided a trading update that shows steady profits and improved franchisee profitability for FY26e. The missing link was that sales trends deteriorated and more stores will be closed. We expect same store sales to decline 1.1% in FY27e, on top of the 4.1% fall in FY26. While store closures and cost savings will help EBIT, cost inflation and declining sales largely offset.

Ampol’s 1H26e trading update revealed an even stronger half of earnings than the market expected, albeit the earnings growth was centred on trading profits given oil price volatility. Ampol stated that EBIT would be near $1,350 million for 1H26e, a rise of $946 million. The key question is the sustainability of earnings. Refining margins may stay elevated while there is Middle East conflict but lower volatility oil market would result in lower earnings.

Australian retail sales rose 4.8% in June 2026, compared with the same month last year. While a slight slowdown in growth, the weakness was very specific to department stores and discount department stores. Elsewhere, household goods sales strengthened and café & restaurant sales remain above trend. Retail demand remains strong and makes higher interest rates a risk. We expect the RBA will need to see retail sales growth of less than 4% in order to take a neutral stance. The drivers of a slowdown in spending will take a few more months to work through, particularly in the household goods categories.

The link provides a presentation associated with a webinar we held. The recording is embedded in the email and details our revised forecasts for retail in the year head. We addressed the impact of higher interest rates, lower house prices and retail price inflation. All these factors will shape the timing and shape of a retail sales slowdown in FY27e. The presentation deck is now live on the website. 

Viva’s 1H26 trading update showed a continuation of near-term benefits from higher oil prices and refining. The strong earnings result has helped lower net debt by $400 million. There may be some residual benefits in 2H26e, but the outlook for retail fuel margins and gross margins in Convenience is negative. The company is also likely to see lower refining margins given the prevailing oil price.

The Australian retail sector is just commencing its slowdown, which will result in slower sales in FY27e. We forecast retail sales growth of 3.7% for FY27e, down from 5.0% achieved in FY26e. The slowdown is more dramatic in non-food retail and dining out. Both had above average growth in FY26e and will suffer weaker volumes as income growth slows and both house prices and housing churn weigh on retail sales. The weakness should become evident in the December 2026 quarter where households will see the lowest rate of income growth. Other factors that will impact retail include the inflation backdrop which will step-up more so in food categories. House price changes and the resulting wealth effect will also be a key swing factor over the next 12 months.

Myer’s trading update signalled a sales deterioration in June and July which dragged sales down 1.8% in 2H26e. The negative impact of promotional activity on gross margin offset tight cost management which drives our forecast FY26e EBIT of $146 million, down 16% on a proforma basis.

Australian price inflation was 3.6% for the June 2026 quarter, year-on-year. Retail sector price inflation was 2.3% with a number of non-food categories like electronics, furniture, auto parts and pharmacy in deflation for the quarter. In food retail, inflation was steady, despite pressures on oil price and packaging. Looking forward, inflation is likely to gradually rise in food by circa 1%, while in non-food deflation is the more likely risk as benefits of a higher Australian dollar pass through to prices. A lower inflation backdrop in non-food retail could exacerbate the weakness in sales over FY27e.

The ACCC has commenced proceedings against dusk in the Federal court related to the sale of non-compliant products. The ACCC is seeking penalties, costs and financial recourse and we estimate a fine in the range of $2 million to $6 million.

The upcoming FY26e reporting season is likely to show better sales trends than some anticipate and active margin management that means results should meet consensus expectations. Even trading updates may be “better than feared”. Don’t misinterpret the good news. Retail sales are highly likely to slow by the December 2026 quarter. Those hoping rate cuts will be enough are overly optimistic.