Domino’s recently announced that Don Meij, CEO of the company for the past 22 years, will retire. The Board announced the appointment of Mark van Dyck, as CEO. He is an executive with experience at Compass Group and within the Coca-Cola system. Mr van Dyck presented a sensible approach to improving profit margins, but it will take time as improving franchisee profitability is a first-order priority in our view. 

Coles (31 October) and Woolworths (30 October) 1Q25 sales results are likely to reflect a small improvement in industry growth with a slight edge for Coles in terms of supermarket growth rate.  We forecast Coles comparable sales growth of 2.6% and Woolworths at 2.1%. The bigger debate is whether industry growth will improve further given supermarket volumes remain sluggish and whether the retailers face any limits on their ability to sustain profit margins as the ACCC Supermarket inquiry continues. We expect softer results from Coles and Woolworths’ other segments in 1Q25e.

The link provides a presentation associated with a webinar we held. The webinar addressed our updated outlook for retail sales and the drivers of a recovery in retail spending. In the presentation, we answer the question of whether consumers will spend or save their income growth, quantifying the impact of rate cuts and tax cuts, which retail categories we expect to outperform in FY25e, and a comparison of Australia with offshore markets.

We have updated our retail sales forecasts, which are modestly higher in FY25e and slightly lower in FY26e. We forecast FY25e retail sales growth of 3.2% (prev 2.9%) and the largest driver of our revisions is stronger non-food online sales growth. A retail recovery is underway, because this year has unquestionably strong household income growth, which sets a solid base for retail spending. However, households have a low savings rate, which detracts from the upswing. We expect a more notable pick up in household goods and online with softer sales in dining out for FY25e.

JB Hi-Fi reported FY24 EBIT down 16%. Sales momentum and margins were encouraging in the second-half and the company has consistently gained market share over the past five years. We expect another year of softening margins, albeit overall EPS should be up slightly in FY25e. While JB Hi-Fi is clearly a well-run business, we expect future earnings growth is likely to be low single-digit at best.

The link provides a presentation associated with a webinar we held. The webinar addressed the updated outlook for retail sales and key drivers that could trigger an improvement in spending. In the presentation, we provide an update on the outlook for retail sales, covering feedback on recent trading and expectations for FY25e. We will address which categories have the best potential for volume recovery and how they are navigating price disinflation. We will also address the risk from interest rates on retail. The presentation also includes insights about retailer profitability, inventory levels, and expectations for retail trading at the FY24e results in August.