Myer Holdings reported 1H26 group EBIT of $113 million, down 17% on a proforma basis. Sales growth of 2.1% was offset by lower gross margins and cost investments. We have revised our sales lower on store count and slowing comps. We lower gross margin expectations and delay synergy and supply chain benefits. Fixing the supply chain issues, delivering on synergies and leveraging Myer One should all translate into meaningful earnings growth delivered from a strong financial position.

Super Retail Group reported 1H26 EBIT down 3%. The weaker result reflected elevated promotions in Rebel and weak sales in BCF. These issues should pass as Rebel’s inventory levels are lean and BCF has already seen an improvement in sales trends. We are positive on earnings outlook over the next two years helped by improving gross margins. Super Retail may see a 70bp gain from the higher Australian dollar. Super Retail Group have arranged an investor day on the 11th June 2026.

Super Retail Group has set a tone for the trading updates across retail. For 1H26e, the company will achieve 4% sales growth, but profit before tax will fall 7%. The weakness is largely attributable to price discounting in Rebel and negative leverage in BCF. The fundamental debate is likely to centre on the sustainability of profit margins. Supercheap Auto has likely peaked and BCF margins are relatively healthy. The turnaround opportunity is Rebel, but competition make it harder to see substantial margin recovery.

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.

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.

Super Retail Group’s trading update shows a slight slowing in sales but bigger drop in gross margins. The pressure on gross margins is most acute in Supercheap Auto based on our feedback and could carry through to 1H26e.