Coles will host an investor day on 14 November 2024. The company will showcase its major capital projects undertaken over the past five years. Witron distribution centres are impressive and Ocado may actually work. The debate in our mind is whether any competitive advantage has been built. We doubt it. Coles margins should “pop” in FY26e as the capital projects deliver and implementation costs drop. However, the medium-term growth is modest and risks remain around a higher intensity of competition along with challenges in growing market share.

Inghams strategy day provided an upbeat tone about the opportunities to improve its sales mix and capex projects that will lift profit margins. The company is targeting double-digit EBITDA margins over time, which would be a 25% lift on our base case of 8%. Given a favourable industry structure, higher margins are possible.

Metcash reported 1H22 EBIT up 14%. The growth was driven by a full-period contribution from Total Tools in Hardware. Total Tools still has a runway for further growth given imminent store acquisitions. The company has also fundamentally stabilised its market share in Supermarkets. Metcash has a much better business mix and industry structure than historically and as a result the shares should trade at a higher multiple.

Woolworths reported a solid FY21 result with EBIT up 14% to $3,663 million. Second-half EBIT growth was a little stronger with the unwind of COVID-19 costs and better earnings in Big W. While good earnings growth, underneath Woolworths had higher operating cost growth and elevated ongoing capex. Moreover, elevated capex will continue over the next two years in supply chain and IT.