Super Retail Group reported FY24 EBIT of $400 million, which was down 9% year-on-year, but up 57% on FY19 levels. This represents a compound annual growth rate of 9%. Given sales trends are starting to improve EBIT should also start to rise. The question is how much. We expect LFL sales to remain between 1%-3% and EBIT margins will be largely steady. Increased competition in auto keeps us cautious about group profit margin expansion. The company’s FY24 EBIT margin of 10.3% is about 80bp higher than FY19 supported by higher gross margins.

Accent Group provided a trading update and details around the planned closure of 17 stores operating under the Glue Store banner. The company highlighted strong second half like-for-like sales trends at 4.1%. This strong performance into the second half of the year was ahead of consensus at -0.4% for 2H24e. The store closures will lower group sales but we lift our gross margin expectations and see improved cost of operations from exiting a portion of the higher cost Glue Stores.

The proposed merger between Chemist Warehouse and Sigma will create a business with close to $760 million of combined annual EBIT with growth of 12%-19% over the next four years. However, the first hurdle is ACCC approval which may be a drawn-out process. While there is an impressive growth profile, the prospects for rollout beyond Australia and New Zealand is still in its infancy. The upside case would see continued elevated like-for-like sales growth and a seamless integration of the Chemist Warehouse contract.