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Retail Mosaic chart pack - Key insights post FY24 reporting season

Insights about the consumer and retail profitability 

01 October 2024

This chart pack provides subscribers with insights about the retail operating environment and outlook for wages, floor space and profit margins. The chart pack has been compiled post the FY24 reporting season across the retail market providing fresh insights about the sector. 

Sigma Healthcare (SIG) - 1H25 result analysis

Chemist Warehouse trading outshines Sigma

30 September 2024

Sigma Healthcare reported underlying EBIT growth of 20% in 1H25, while Chemist Warehouse reported standalone 2H24 EBIT growth of 37%. Chemist Warehouse EBIT for the comparable trading period is 14x larger than Sigma. This cements our view that the merger is the key driver of Sigma’s share price.

Premier Investments (PMV) - FY24 result analysis

Tally-ho, Peter Alexander, tally-ho

27 September 2024

Premier Investments reported FY24 Retail EBIT down 9% to $326 million. Gross margins finished higher with a second-half increase of 94bp. Cost management during FY24 helped offset the operational leverage of lower sales. The delayed strategic review allows the board to focus on the Myer merger proposal. 

Harvey Norman (HVN) - FY24 result analysis

Limited margin recovery

03 September 2024

Harvey Norman reported FY24 EBITDA down 11% with a drop in Franchising and New Zealand earnings and increase in its property earnings. The company has lost market share in both Australia and New Zealand over the past five years and its EBITDA margin recovery is yet to emerge. We expect New Zealand to remain a headwind in FY25e but Australian earnings should rise slightly. The quality of the FY24 result was low with reduced lease amortisation supporting earnings.

City Chic (CCX) - FY24 result analysis

Through the worst

03 September 2024

City Chic reported an FY24 pre-AASB 16 EBITDA loss of $19 million, an $8 million smaller loss than in FY23. This was a beat to the guidance of -$22 million provided at the time of the capital raising in June 2024. City Chic’s trading update showed positive comparable sales up 9.9% and further, provided revenue guidance of $142 to $160 million for FY25e.

Lovisa (LOV) - FY24 result analysis

Where's the leverage?

02 September 2024

Lovisa reported FY24 EBIT of $128 million, up 21%. Sales of $697 million, up 17.3% were a 2% miss to Visible Alpha consensus. The comparable sales trading update at 2.0%, while an improvement on 2H24 was lower than consensus expectation. Sales on a per store basis in A$ were lower across all segments. The gross margin performance was a highlight, delivering 81.2% in 2H24 and 80.9% for the full year, up 108bp. Elevated costs, especially wages and rents, suggest there is little operating leverage being realised so far.

Wesfarmers (WES) - FY24 result analysis

What to pay for low growth?

02 September 2024

Wesfarmers reported modest EBIT growth of 3% in FY24 with low growth for Bunnings, a decline in WesCEF and strong rise in Kmart EBIT the notable factors. Bunnings earnings growth is likely to remain low over the next two years given limited store openings and a challenging demand backdrop. We think Kmart’s margins are near a peak, particularly given price competition with rivals is heating up. WesCEF and lithium become the key driver of Wesfarmers earnings from here and it will take up to three years to see meaningful earnings.

Woolworths (WOW) - FY24 result analysis

Woolies needs the X-factor

30 August 2024

Woolworths reported FY24 EBIT of $3,223 million, up 3% on a reported basis, or 1.1% adjusted for the extra week. Second-half EBIT fell by 1.3%. While Australian Food EBIT was decent, New Zealand Food and Big W had very weak results. Online sales are accelerating for Woolworths, but the overall benefit to earnings seems limited given supermarket store profits declined in 2H24. Woolworths also provided guidance on capex at $2.0-$2.2 billion for FY25e.

Coles Group (COL) - FY24 result analysis

More ups than downs

30 August 2024

Coles reported underlying EBIT up 5.7% for FY24 on a 52-week basis. EBIT growth in Supermarkets was much stronger in the second-half but Liquor earnings fell significantly. Coles had a step-down in sales trends in 2H24 and these are likely to continue. The gross margin gains from lower stock loss in FY25e should underpin a flat EPS year with better EPS growth in FY26e as the benefits of the Witron and Ocado capex projects comes to fruition.

Endeavour Group (EDV) - FY24 result analysis

A stronger focus on cost control

29 August 2024

Endeavour Group reported FY24 EBIT up 1.8% on a 52-week basis and EPS dropped 4.3% given higher finance costs. We expect a flat EPS of 28.6 cents for FY25e with subdued 1H25e sales growth and higher finance costs largely offsetting better gross margins and cost savings.  Endeavour’s underlying sales momentum shows market share gains and cost savings are likely to continue to build in FY26e.

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