Bapcor has made the painful decision to raise equity to fix its balance sheet at a time when earnings have fallen dramatically. EBITDA dropped 40% in 1H26. The equity raising should reduce leverage to 1.2x net debt to EBITDA (pre AASB-16) in FY27e, which gives a buffer to fix the business. The fix required is substantial. Bapcor focuses on its EBITDA margin (post AASB-16), which is on track to be 8% for FY26e. The EBIT margin, pre AASB-16, is much lower at 2.3% and highlights the need to more than double margins to be viable. In our view, margin recovery requires a 10% or more lift in sales, store closures and better efficiency within its supply chain. Bapcor has a poor track record of execution and will take time to restore confidence with investors.

Wesfarmers reported EBIT growth of 8% in 1H26. There was solid growth in its retail business and an outsized earnings improvement in lithium and associate income. The shape of the result raises debate about the likely operating leverage in Bunnings and Kmart, which we expect to be modest, especially as depreciation expenses normalise. We are also likely to see slowing sales trends on a 12-month horizon given weaker household income growth and fading price inflation. Wesfarmers will have solid EPS growth of 7% over FY26e and FY27e helped by higher lithium prices.

The National Accounts results for the December 2025 quarter side with the RBA’s view that the consumer is in a strong position. Household income growth of 6.9% for the quarter (year on year) is well above trend. Consumer spending growth was 5.6% and discretionary spending outpaced staples spending. We view the December 2025 quarter as the peak in spending for the cycle. The combination of higher interest rates and higher petrol prices are likely to dent income growth and spending. However, the headlines about higher petrol prices may be worse than the actual outcome. A 15-35 cent lift in petrol prices would result in a 0.4% to 0.9% slowdown in retail sales growth on our estimates.

Harvey Norman reported 15% EBITDA growth in 1H26. Sales growth was solid in both the key markets of Australia and New Zealand and profit margins expanded with better cost control. Harvey Norman’s sales trends are likely to slow in Australia and NZ over the next 12 months, but we expect it to be a mild slowdown. The improved inventory position for franchisees bodes well for margin expansion in 2H26e.

Coles Group reported 2.5% sales growth and 10.2% EBIT growth in 1H26. The key driver of earnings was higher gross profit margins, which should persist in 2H26e, but then fade in future years. Cost savings and productivity benefits from its supply chain investment are also boosting profit margins. Coles sales trends have slowed highlighting the Woolworths DC strike benefit was transitory. However, its growth still outstripped Woolworths on a two-year basis. Coles has de-rated over the past month and its sales momentum is likely to converge with Woolworths over the next 3-6 months.

Super Retail Group reported 1H26 EBIT down 3%. The weaker result reflected elevated promotions in Rebel and weak sales in BCF. These issues should pass as Rebel’s inventory levels are lean and BCF has already seen an improvement in sales trends. We are positive on earnings outlook over the next two years helped by improving gross margins. Super Retail may see a 70bp gain from the higher Australian dollar. Super Retail Group have arranged an investor day on the 11th June 2026.

Woolworths reported 14% EBIT growth for 1H26, helped by improving sales trends and more consistent execution across its divisions. While a good result, there was a low base in the previous corresponding half. Woolworths sales trends may slow from here and the margin gains in eCommerce and Digital & media will be difficult to repeat. The outlook for FY26e through to FY28e is good as margins recover further and supply chain investments deliver a return. The PE premium to Coles is back to its long-term average.

Accent Group reported 1H26 EBIT of $57m, down 30%. Underlying gross margin of 54.3% was down 130bp. The trading update for the first eight weeks was flat. We have rebased our forecasts for FY27e on the proforma earnings base of FY26e which strips out the exit of Glue Store and OzSale. We lower our sales forecasts on closures and lift our gross margin and cost of doing business forecasts. A Strategy Day will be held in May 2026 to provide an update on growth priorities.

Noumi’s 1H26 result included highlights such as MilkLab sales growth of 8.0% and Dairy & Nutritionals EBITDA margin expansion of 249bp to 5.2%. Overhanging the result is the maturity of the convertible note in May 2027. Work is in progress though no decisions have been finalised.

Viva reported FY25 EBITDA down 6%, but 2H25 EBITDA up 33%. The turnaround in fortunes in Convenience is encouraging, albeit higher fuel margins in 2H25 may not be sustained. Cost savings from FY25 and improving shop gross margins help lift our FY26e Convenience EBITDA to $246 million. We can see a path to $336 million by FY28e, or 71% higher than FY25. However, executing on a supply chain transition and OTR store conversions will be necessary. We see asset sales of $150-200 million as sufficient to bring down leverage from 3.0x in FY25 to 2.0x in FY27e.