We have updated our store forecasts to correct for our store scrape analysis that had included clearance stores. Nick Scali presents stores on an ex-clearance store basis which were erroneously reflected in our previous report. Having corrected our store assumptions, we still see sales growth for the Nick Scali group driven by stores openings and the UK. The store growth opportunity for Nick Scali both domestically and internationally is attractive.

The Federal Budget for FY27e is positioned as reform and addressing inter-generational equity for taxpayers. However, the implications over the next 1-2 years on consumers and the retail sector is mild. We estimate less than 0.2% boost to household income over FY27e to FY29e, which pales into insignificance compared with the 1.8% boost to households from government spending in FY25. The changes to tax deductions on investment properties will take many years to shift housing churn and house prices given existing investors are grandfathered. The path of retail sales for the next three years will be more dependent on the interest rate outlook and employment growth. We expect a slowdown in retail sales to be most evident in the July-December 2026 period as income growth slows.

Sigma’s trading update revealed a small, but notable improvement in sales trends and an entry into the UK through a joint venture. Improved sales trends appear to be driven by GLP-1 drugs, resulting in margin dilution. The UK joint venture is small with five stores to be trialled in the Chemist Warehouse format in London. While Chemist Warehouse has impressive growth, expectations are high and the patience of company management may be higher than the patience of the market.

Super Retail Group’s May 2026 trading update shows a meaningful slowdown in sales, particularly in BCF and Supercheap Auto. These two businesses are more directly impacted by the spike in petrol and diesel prices. We expect soft sales trends to persist into FY27e, but also see gross margin gains from a stronger Australian dollar, self-help in Rebel and distribution centre benefits flowing through to earnings. We expect to hear more on these topics at Super Retail Group’s strategy day on 11 June 2026.

Inghams will hold a strategy day on 11 May 2026. The last strategy day in November 2023 failed to hit the mark given the loss of Woolworths volumes highlighted its vulnerability. On this occasion, we expect Inghams to be, rightly, less ambitious and more focused on improved execution. EBITDA margins are likely to land at 6.0% in FY26e, flat on the modest level achieved in FY23. A return to decent volume growth and improved margins is needed.

Endeavour Group’s 3Q26 trading update revealed slower sales trends with an enticement of $100 million in cost savings in FY27e as a benefit. The reality is that sales trends are insufficient for cost savings to drop through to earnings. We expect Endeavour to continue gaining market share given First Choice could close, but a recovery in market growth is more important in our view, which may take time as retail liquor reverts to slight per capita volume declines.

Accent Group has downgraded FY26e guidance. The downgrade to reported EBIT of 8% at the mid-point is attributed to geopolitical unrest. A cost out programme for FY27e and an ASIC investigation into staff share transactions were announced. Accent Group sentiment is lower as a result of the post Covid slump in earnings, management uncertainty and risk of execution for the Sports Direct roll out.

Coles reported 3Q26 sales growth of 3.1%. While 3Q26 sales lagged its rival, Coles Supermarket track-record has been superior to rivals and the market over the past three years. Its Supermarket growth rate is likely to converge with Woolworths over the next nine months in our view. In Liquor, Coles rebranding has not delivered any earnings improvement and former First Choice stores could be shut down in our view. Coles looks to have enough flexibility to manage the fuel price and inflationary pressures near-term. The more important debate will be the ability of the two major supermarkets to ensure ongoing healthy rates of sales growth, which should occur as food inflation accelerates over the next year.

Australian retail sales rose 5.7% year-on-year in March 2026, which is an improvement on February growth, despite the spike in petrol prices and interest rates. It is noteworthy that discretionary categories like department stores and fashion did well. Cafes, restaurants and takeaway food sales were also strong. We expect some dip in April, but only by 1-2 percentage points, which suggests consumer spending is yet to slow much in response to economic headwinds. The slowdown will take time and be more evident in the December 2026 half-year in our view.

Woolworths 3Q26 sales growth of 4.5% was solid across all segments. Even so, the company has lowered its earnings guidance on higher fuel prices and a decision to absorb cost increases on supermarket essentials over the next three months. It is clear that Woolworths top priority is improving its price perception with shoppers. We expect sales trends to slow as the unwind of strike impacts is bigger than the inflation pick-up over the next six months. We see a decent earnings path for FY27e as Woolworths benefits from further cost savings and simplification.