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.

Premier Investments has provided a trading update that reveals that 2H23 sales rose 1.3% and Retail EBIT fell 2.2%. In light of a weaker backdrop it is a good result. The company has also announced a strategic review that could result in separation of Peter Alexander and Smiggle and release value in its franking credit balance.

Treasury Wines reported FY23 EBITS up 11%. The second-half rose by 6%. While the profit result was decent, the sales performance was poor, particularly in the Americas. Margin targets have largely been met and the company needs to kick start revenue growth from here. We expect revenue to rebound in 2H24e. The lower Australian dollar will represent a meaningful contribution to the achievement of “high single-digit” EBITS growth in FY24e.  The key share price driver remains an unwind of tariffs in China, which may happen within the next six months.

Endeavour Group reported FY23 sales up 2% and EBIT up 11%. The debate is whether the company can cut costs sufficiently to ensure profit margins do not fall in FY24e. The company faces cost growth of 7% on our estimates and sales growth is more likely to be 4%. While a combination of gross margin gains in its Retail division and some cost savings should help, we expect modest margin compression. Another headwind in FY24e will be higher net interest costs.

Endeavour Group reported FY22 EBIT up 3%. Even though the operating environment is now normalising, we expect pressure on gross profit margins to keep a lid on earnings growth in FY23e. Retail gross margins are likely to fall in 1H23e and higher gaming taxes will detract from the earnings recovery in Hotels.