Premier Investments reported FY24 Retail EBIT down 9% to $326 million. Gross margins finished higher with a second-half increase of 94bp. Cost management during FY24 helped offset the operational leverage of lower sales. The delayed strategic review allows the board to focus on the Myer merger proposal. 

Coles reported 1H23 sales up 4% and EBIT up 14%. The result showed good growth on the surface, however, reduced COVID-19 costs and the accounting associated with Express earnings drove growth. While sales growth should remain strong, inflation is peaking and operating cost growth could stay elevated too. Coles’ change of CEO comes at a crucial time where delivery of new distribution centres should drive earnings over the next three years.

Super Retail Group reported 1H22 sales down 4% and EBIT down 33%. The process of normalisation in earnings has begun. We expect 2H22e sales to rise 1.3% and EBIT to fall 11%. The company’s elevated inventory position is largely skewed towards Supercheap Auto, which in inherently lower risk than its other segments. Operating cost growth will continue in 2H22e given data and digital investments, but there is some flex to manage labour costs to sales.