Premier Retail reported 1H25 sales down 1% and EBIT fell 20%, including the impact of the Peter Alexander’s UK expansion. We forecast sales growth of 4.5% in 2H25e with a smaller gross margin decline. Cost growth will continue, leading to EBIT margins dropping by 778bp to 21.9% for FY25e. Premier Investments will continue to focus on improving Smiggle’s performance which is showing early signs of improvement.

Harvey Norman reported 1H25 system sales growth of 4% and EBITDA up 4%. Sales trends have improved in absolute terms and relative to market in Australia. The company’s 1H25 result also indicates a better inventory position in Australia, which should support sales and profit margins. While all the key metrics look better for the company, its growth potential is still low in our view and increasingly based on offshore growth.

Endeavour reported 1H25 EBIT down 10% with a poor result in the Retail segment the primary driver. Higher transition costs to its new systems, distribution centre strikes and weak liquor industry sales all contributed to the challenging half. However, these issues are transitory. We expect another soft result in 2H25e given One Endeavour costs and wage inflation. However, we can see an inflection point emerging. Earnings should recover as industry-wide sales improve and cost savings flow through.

Bapcor reported 1H25 underlying sales up 0.3% and EBITDA of $132 million, down 8%. Sales have started the second half up slightly. The full year cost saving guidance for $20 to $30 million has been reiterated and will lead to lower total costs in 2H25e, supportive of an improvement to EBITDA. Bapcor will host a Strategy Day in late April 2025 at which the new CEO will provide more clarity on the strategic direction.

Lovisa reported 1H25 EBIT of $90 million, up 11%, slightly below consensus estimates of $92 million. With revenue growth stunted by flat comparable sales, gross margin was the standout, hitting a record 82.4% (up 170bp). The trading update signaled an improvement in trading momentum with LFL at 3.7% and the company is confident that the store rollout will reaccelerate. Cost growth gives us pause. Gross margins need to be maintained to offset cost growth if comparable sales don’t deliver, which is difficult with increasing competition. Given the lack of traction in Asia, we have removed the probability of an accelerated China rollout.

Coles reported 1H25 EBIT up 5% with a stronger lift in its Supermarkets division of 7%. The company had solid sales trends, which partly reflected a benefit from Woolworths DC strikes. Underlying sales and EBIT growth in the Supermarket business is closer to 3%-4%. Cost savings and DC efficiencies are offsetting natural cost inflation, not boosting margins. Over the next 18 months, Coles will benefit from the unwind of transition costs that will lead to double-digit EPS growth.

Woolworths reported sales up 4%, but EBIT down 14% in 1H25. We expect the company will have a challenging 2H25e as well. Management is starting to address its challenges. CEO, Amanda Bardwell, said that the company will assess the shape of its business portfolio. Each business unit must have reasonable prospects on a 3-5 year view. Overhead costs are being cut and there is a tougher stance on the low returning Big W and NZ divisions.

Inghams reported 1H25 poultry volumes down 2.7% and EBITDA dropped 10%. Price realisation was good and Inghams had feed cost reductions and admin cost savings to partly offset the volume decline. Prices are 19% higher than three years ago. This is important as it signals that new contract wins to replace lost volume with Woolworths has not been done at irrational prices.

Accent Group reported 1H25 EBIT of $81 million, up 11%. The gross margin deterioration of 100bp owing to promotional intensity lead us to lower full year expectations. The nearing maturity in the store opportunities for Platypus and Skechers see us lowering our long term store forecasts by 4.5%. We incorporate an upside case in our valuation for a deal with Frasers Group.

GyG reported 1H25 network sales growth of 23% and network EBITDA growth of 28%. The strong sales have been helped by growth of breakfast sales and after 9pm. In addition, delivery sales have grown as a share of the business. While there was less operating leverage than hoped, the primary driver is additional store openings, which are a drag on margins in their first 12 months. While near-term leverage is softer, the company’s scope for store growth and margin expansion remains strong.