Harvey Norman reported FY24 EBITDA down 11% with a drop in Franchising and New Zealand earnings and increase in its property earnings. The company has lost market share in both Australia and New Zealand over the past five years and its EBITDA margin recovery is yet to emerge. We expect New Zealand to remain a headwind in FY25e but Australian earnings should rise slightly. The quality of the FY24 result was low with reduced lease amortisation supporting earnings.

City Chic reported an FY24 pre-AASB 16 EBITDA loss of $19 million, an $8 million smaller loss than in FY23. This was a beat to the guidance of -$22 million provided at the time of the capital raising in June 2024. City Chic’s trading update showed positive comparable sales up 9.9% and further, provided revenue guidance of $142 to $160 million for FY25e.

Lovisa reported FY24 EBIT of $128 million, up 21%. Sales of $697 million, up 17.3% were a 2% miss to Visible Alpha consensus. The comparable sales trading update at 2.0%, while an improvement on 2H24 was lower than consensus expectation. Sales on a per store basis in A$ were lower across all segments. The gross margin performance was a highlight, delivering 81.2% in 2H24 and 80.9% for the full year, up 108bp. Elevated costs, especially wages and rents, suggest there is little operating leverage being realised so far.

Australian retail sales rose 2.6% in July 2024 year-on-year. While overall sales trends remain weak, the standout was online, which was up 14.3% with strength in both food and non-food online. Amazon’s Prime Day has had spillover effects across the market. Hardware, Liquor and Takeaway Food were in decline in July. Pharmacy and furniture had good sales growth. We expect a gradual improvement in sales growth over the next six months led by non-food retail categories.

Wesfarmers reported modest EBIT growth of 3% in FY24 with low growth for Bunnings, a decline in WesCEF and strong rise in Kmart EBIT the notable factors. Bunnings earnings growth is likely to remain low over the next two years given limited store openings and a challenging demand backdrop. We think Kmart’s margins are near a peak, particularly given price competition with rivals is heating up. WesCEF and lithium become the key driver of Wesfarmers earnings from here and it will take up to three years to see meaningful earnings.

Woolworths reported FY24 EBIT of $3,223 million, up 3% on a reported basis, or 1.1% adjusted for the extra week. Second-half EBIT fell by 1.3%. While Australian Food EBIT was decent, New Zealand Food and Big W had very weak results. Online sales are accelerating for Woolworths, but the overall benefit to earnings seems limited given supermarket store profits declined in 2H24. Woolworths also provided guidance on capex at $2.0-$2.2 billion for FY25e.

Coles reported underlying EBIT up 5.7% for FY24 on a 52-week basis. EBIT growth in Supermarkets was much stronger in the second-half but Liquor earnings fell significantly. Coles had a step-down in sales trends in 2H24 and these are likely to continue. The gross margin gains from lower stock loss in FY25e should underpin a flat EPS year with better EPS growth in FY26e as the benefits of the Witron and Ocado capex projects comes to fruition.

Endeavour Group reported FY24 EBIT up 1.8% on a 52-week basis and EPS dropped 4.3% given higher finance costs. We expect a flat EPS of 28.6 cents for FY25e with subdued 1H25e sales growth and higher finance costs largely offsetting better gross margins and cost savings.  Endeavour’s underlying sales momentum shows market share gains and cost savings are likely to continue to build in FY26e.

Inghams reported FY24 EBITDA of $240 million pre AASB-16, growth of 29% (on 52-week basis). While the result was good, second-half earnings growth was soft and the company revealed that Woolworths will cut back volumes with Inghams to diversify its supplier risk. We expect Woolworths’ FY25e volumes will fall 10%-20% with Inghams. Lower feed costs are a strong tailwind for FY25e and should offset much of the headwind from lower Woolworths volumes.

Accent Group reported FY24 EBIT of $128 million, adjusted for impairment, down 1% against a 52-week comparable. The trading update of like-for-like sales of 3.5% was a slowdown on the 4.1% achieved in 2H24. A lower 2H24 gross margin, explained by an inventory write-down, was in contrast to the 136bp gross margin improvement in 1H24. Given positive trading momentum, structural gross margin improvement strategy and the exit of underperforming banners and sites we see Accent Group growing earnings by a 9.5% CAGR over the next 3 years.