A2 Milk reported a strong improvement in underlying earnings. On a continuing business basis, revenue rose 19% and EBITDA was up 18%. The Pokeno acquisition was a loss-making contribution in the half pointing to even stronger performance in 1H26. The sales result was helped by acquisitions and currency, which will fade into 2H26e. While China infant formula growth was good, more meaningful market share gains would be more encouraging. The company lifted its guidance metrics for FY26e and should meet its $2 billion revenue target this year. We would prefer a little more margin for safety in the valuation given its reliance on China infant formula growth.

Treasury Wines 1H26 EBITS had been pre-announced. The new news included a suspension of dividend payments given high gearing and clarity on its volume performance. The actions from new CEO Sam Fischer highlight a need to fix the supply-demand balance across its key markets and reduce debt. Depletions growth in Penfolds still looks encouraging. However, destocking over the next two years will result in a lack of any apparent earnings recovery.  The future growth of Penfolds is not appropriately reflected in the share price and long-term earnings upside exists once the destocking is complete.

JB Hi-Fi reported 1H26 EBIT up 8%. The drivers of the result were good sales growth and a slight tick-up in gross margins with higher operating cost growth. The company’s sales update for January 2026 highlighted a slowdown in momentum, which is likely to play out in calendar 2026. We expect comparable sales growth of closer to 3% for JB Hi-Fi Australia and The Good Guys over the next 18 months. In particular, JB Hi-Fi Australia has a high hurdle in the June 2026 quarter. Even though sales are slowing, the ability to extract margin support from suppliers is strong and there is flexibility in the staff cost base.

Sales grew 5% in 1H26 (MSTe +3.8%) and 17.8% in the first six weeks of 2H26e. Gross margins at 65.2% were +3bp in 1H26 (MSTe 63.1%), and management guided to flat gross margins on pcp for 2H26e. Given the early success of the “AfterGlow” store format, management plan to accelerate the new store concept rollout with “mini refurbs”.

Nick Scali delivered 1H26 EBIT of $68.5 million, up 25%. NPAT of $41 million was ahead of both guidance and Visible Alpha consensus. The group gross margin increase of 318bp, surprised to the upside and resulted in 65.4% for the half. Nick Scali’s ANZ trading update for January like-for-like written sales orders at 3.1% highlighted a deterioration in momentum. We have lowered our sales forecasts but lifted gross margin expectations.

Breville reported strong constant currency sales growth of 9% in 1H26, but tariff headwinds resulted in an almost flat EBIT result. Sales momentum may soften a little as the retailer sell-in eases and price inflation drops over 2026. We expect the company to maintain a tight control on costs in 2H26e to meet EBIT guidance of “slight” growth. The continued growth of the coffee category, new product launches and new markets support ongoing EBIT growth near 10%, noting the company does face a headwind from a stronger Australian dollar in FY27e.

Temple & Webster reported 1H26 EBITDA of $13.5 million, up 2.2%. The EBITDA margin of 3.6% for 1H26 was within the guidance range of 3-5%, but on the low end, as promotional activity was used to drive a sales outcome. We lift our sales forecasts but lower our delivered margin to reflect a more promotional environment. The Temple & Webster model continues to deliver market share gains and over time scale will drive margin improvement.

Australian retail sales rose 4.7% year-on-year for December 2025. This was a solid end to the year and the December quarter showed growth of 5.8%, which was above trend. It is important to call out the strength of non-food, which was 7.1% across the December quarter, an unusually strong result. We believe we have just seen the peak in retail sales growth, with a gradual slowdown over 2026 likely.

Peter Alexander is a high margin, cash generative business. However, we anticipate a sales deterioration and gross margin drop at Smiggle in FY26e, and think Smiggle will be breakeven, contributing little to our FY26e Premier Investments EBIT forecast. We have lowered our Smiggle store network forecasts, lifted operating costs but also raised gross margin expectation on favourable currency moves.

Super Retail Group has earnings upside in Rebel and from its new Victorian distribution centre. The addition of a currency tailwind for cost of goods in FY27e supports solid EPS growth. We estimate a 10% lift in the Australian dollar could be a $30 million, or 8% EBIT benefit. It is a 71bp boost to gross margins. While there is some uncertainty given changeover of CEO and a new three-year strategy plan coming, we expect the plan to have few surprises.