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.

The Australian grocery industry has returned to sluggish growth with challenges in both top-line sales growth and bottom-line cost pressures.  This chart pack addresses the risks and opportunities ahead for the Australian grocery industry. The presentation has three sections. 1) Consumers have more money to spend but will remain budget-conscious. 2) Retailers are struggling to deliver sufficient growth. 3) Volumes are weak, so where are the opportunities?

Australian retail sales grew 3.2% in March 2025 year-on-year. March was impacted by the timing of Easter. Last year Easter Sunday fell on 31 March but was on 20 April in 2025. Impacts are varied by category depending on product and store closure effects. On an underlying basis, March growth looks strong for supermarket, department stores and recreational goods. Queensland sales were dragged down by Cyclone Alfred.

Australian retail sales rose 4.1% in January 2025 with decent signs of growth across most categories. Liquor is still lagging, while hardware and electronics were softer than recent months. Pharmacy and recreational goods were the standout segments. We expect retail category and company divergence to rise over the next six months. Overall sales trends are likely to bounce around the 3%-4% mark, which is satisfactory growth, but still a challenge relative to cost growth.

Australian retail sales rose 4.0% in December 2024, with some notable outliers across segments. Electronics was up 11%, furniture up 8% and pharmacy up 7%. On the other hand, department stores, supermarkets, liquor and recreational goods were all very soft. Some of the shifts reflect the baseline with December compound annual growth rates actually slower than November for all categories other than hardware and liquor.

Australian retail sales rose 4.1% in November 2024. In non-food retail, sales were up 4.0%, while the CAGR growth over five years was 7.3%. November benefited from a bigger Black Friday event but also from warmer, drier weather. Supermarkets, liquor, fashion and cafes/restaurants all had much stronger growth. The sales trends have improved in recent months, which may be a little stronger than true trends because of favourable weather and the heavier discounts enticing shoppers. We expect some softness in the March 2025 quarter.

Australian retail sales rose 3.8% year-on-year in October 2024. It was a strong month for non-food retail up 5.1%, which is above long-term trends. It is uncommon for non-food to outperform, but the combination of good household income growth and a softer September has brought out shoppers. Pharmacy, cosmetics, recreational goods and online were the strongest growing categories. Our feedback on Black Friday sales suggests November will show solid growth too. We may see some weakness in December as promotional fatigue sets in.

Australian retail sales rose 0.9% in September 2024 year-on-year. This was a deceleration on the 4.0% growth in August. August benefited from Father’s Day timing and promotional activity, which took sales from September. Looking at the September quarter, retail sales were up 2.5% compared long-term trends of 4.9%. Pharmacy, recreational goods and furniture were the non-food categories in growth during September. We see consumers delaying purchases in anticipation of Black Friday deals which means a more subdued October as well.

Australian retail sales rose 4.0% in August 2024 year-on-year. This was an acceleration on the 2.6% growth in July with online outperforming at 12.0% growth. Dining-out slowed, but supermarkets were strong.  Afterpay Day, Father’s Day and better weather supported liquor, recreational goods and clothing spend. Pharmacy continues its strong sales growth. We expect sales growth to be softer in the next two months ahead of Black Friday promotions in November.

Amazon’s latest Australian accounts show its market share gains are accelerating. In 2023, we calculate the online retailer had $5.8 billion in gross transaction value (GTV), which would account for one in $10 of all online spending by Australians. It could reach $10 billion in GTV over the next three years. While Amazon is winning share, we find that it is doing so rationally on price.