Like most Australian retailers, JB Hi-Fi faces a weaker demand backdrop. While there are risks to sales, the difference to previous cycles is the presence of inflation in some electronics categories. Even so, investors should expect weak sales trends for up to two years for JB Hi-Fi. Near term, the phasing of the iPhone 18 launch won’t save sales in 1Q27e. Inflation in gaming consoles may boost 2Q27e and 3Q27e has some product tailwinds.

Now that reporting season is over for Australian retail, we have finalised the themes and issues observed during FY26. The strength of sales trends in FY26 has been met with weaker trading updates going into FY27e as the consumer faces a number of headwinds to end 2026 – interest rates hikes, falling house prices and higher petrol prices add risk to the retail outlook. The impacts are likely to be more significant in the 1H27e fiscal period and more painful in housing-related retail categories and takeaway food.

Woolworths reported FY26 sales growth of 4%, EBITDA growth of 7% and EBIT up 13%. The company’s sales momentum remains good and it should continue for the next six months, but then outperformance is likely to fade as Woolworths laps higher promotional activity. We expect a modest pick-up in inflation. Woolworths earnings growth was helped by unusually low depreciation growth. Nevertheless, Woolworths has more margin expansion opportunity over the next three years than Coles. The NZ and Big W segments had better earnings. The path to a 10%+ return on funds is plausible for these businesses but margins would still be low by historical and industry standards.

Harvey Norman reported FY26 EBITDA up 8%. However, cracks are emerging with sales slowing and Franchise segment EBITDA dropping in the second-half. Conditions are likely to deteriorate over the next 12 months, especially if Harvey Norman continues to fund more franchisee discounting. Sales are also falling in NZ, Harvey Norman’s second largest market. Harvey Norman usually delivers more operating leverage than other large retailers. As we enter a downturn in the housing cycle, lower sales will reduce earnings.

dusk reported sales growth of 14% in 2H26 and full year growth of 8.4%. Gross margins improved 279bp in 2H26 driven by promotional discipline, currency benefits and improved logistics.