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.

Over the past decade, retail rental growth has been less than sales growth for many ASX-listed retailers. Can this trend continue? In Issue 8 of Price Watch, we analyse floor space supply and demand. We expect retail supply per capita to fall by 0.7% p.a and retail demand to rise by 0.5% p.a. This is a meaningful disconnect placing upward pressure on rents. We expect half the gap to be solved through productivity initiatives by retailers and landlords to work floor space harder and reduce anchor tenant space. The retailers with the highest exposure to the top 30 shopping centres are Accent Group, Premier Retail, City Chic and JB Hi-Fi.