JB Hi-Fi provided a January 2022 trading update with improving sales trends in 2Q22. NPAT of $288 million was down 9% on 1H21, but up 69% on 1H20. While many are wary an anticipated mean reversion in sales and earnings, it may be gradual. While volumes will mean revert, price inflation is likely to accelerate, gross margins are likely to be higher in The Good Guys and there will be operating leverage.

We expect Super Retail Group will have a good Christmas trading period and gross margins hold up relative to strong levels from 2020. However, the company does face rising import costs and higher operating cost growth that is likely to lower EBIT margins in calendar 2022.