The link provides a presentation associated with a webinar we held. The webinar addressed our retail sales forecasts for FY26. We addressed the crucial time for retailers that is the festive season and how trends may shift across retail categories. While the macro-economic backdrop is conducive, what will it take to see stronger sales growth?  

The festive season will ramp-up for retailers in the next few weeks. The consumers’ embrace of Black Friday has resulted in November sales now representing a bigger share of the annual calendar in Australia compared with the US, UK and NZ. The timing and high base makes it difficult to see a strong festive sales period in 2025. We forecast non-food sales to rise 4.0%, a slight dip on recent trends. While the sales backdrop will be decent, the risk is retailers discount earlier this year given higher inventory for some. We highlight Accent Group and Lovisa as retailers with elevated inventory levels.

This chart pack provides subscribers with insights about the retail operating environment and outlook for sales, gross margins and operating leverage. The chart pack has been compiled post the FY25 reporting season across the retail market providing fresh insights about the sector.

Myer reported an FY25 EBIT of $140 million, down 14% and inclusive of six-months from Apparel Brand. On a pro-forma basis Myer Group EBIT for FY25 was $174 million, down 30%. Sales trends are showing modest improvement. We expect flat gross margins from continued promotional pressure. We forecast cost growth of 3.6% to result in EBIT down 2% for FY26e (on a pro-forma basis). Shareholders will need patience. Myer will need to deliver on synergies which are largely expected in FY27e.

Lovisa reported FY25 EBIT of $139 million, up 8%. Gross margins improved 100bp, to 82.0%. The trading update of 5.6% comparable sales growth was an acceleration on the strong 2H25. We lift our sales and gross margin forecasts but also our cost assumptions given 27% cost growth in 2H25.

Woolworths reported FY25 EBIT down 15%. While it was a rough year, the more concerning issue is that its rebound in FY26e has been tempered by guidance. The earnings recovery will be impacted by ongoing investment in its supply chain transformation and simplification. Woolworths sales trends are likely to accelerate beyond 1Q26e as price investment and execution improve and management disruptions settle down. We lower our EPS by 7.9% in FY26e and 9.6% in FY27e given higher one-off costs.

Accent Group reported FY25 EBIT of $110 million, in line with guidance and flat on the pcp. The trading update indicated LFL sales turned slightly positive on the 2H25 drop of 1.5%. The first Sports Direct store is due to open in November 2025. Guidance provided is for EBIT growth of high single digits, close to $120 million. We forecast $115 million EBIT for FY26e, growth of 4.5% with a view that competition will crimp gross margins.

Super Retail Group’s FY25 result revealed an encouraging reversal of fortunes in the second-half. While 1H25 EBIT fell 7%, 2H25 EBIT rose 9%. The better gross margin and lower cost growth in 2H25 are likely to support earnings in FY26e. While margins are better, sales trends remain volatile and we only forecast 2% EBIT growth in FY26e. There will be a drag from higher overhead costs. While margins are improving, the sales backdrop is unlikely to accelerate much making it difficult to accelerate earnings growth.

The Australian consumer sector is likely to report a wide divergence in fortunes this reporting season. Even though sales trends are improving, operating cost growth is elevated and gross margin gains are fading. The companies with the best earnings growth for FY25e are likely to be Breville, GyG, Harvey Norman, Lovisa, Sigma and Treasury Wines. For most of these, consensus expectations are already high and commentary on current trading and costs will influence share prices. At the other end, retailers with double-digit declines in earnings are Endeavour, Myer, Nick Scali and Woolworths.

Accent Group’s trading update showed deteriorating sales trends, with comparable sales turning negative since March 2025. As a result, 2H25e EBIT will be down 23%. We expect sales growth to be below cost growth again in FY26e resulting in EBIT of $102 million, down 7%. The concern is Skechers is mature and Platypus may decline. With issues in portions of the core business, execution risk is elevated. Positive comp sales are essential in a high cost growth environment and will need to recover to offset the growth in wages and rents.