Australian retail sales finished fiscal 2025 with 4.6% growth for June 2025, the strongest growth in over two years. The standouts were online, recreational goods, pharmacy, cosmetics and electronics. Liquor, cafes & restaurants and supermarkets were all laggards. The strong finish to the year partly reflects end of financial year sales. Retail spending for FY25e was up 3.3% and we see 3.9% growth for FY26e.

Australian retail sales rose 4.1% in May 2025 year-on-year. This is an acceleration on the combined March-April growth of 3.6%. Foot traffic data for May reported growth of 8%. Pharmacy, beauty, recreational goods and online were strongest in May. Weaker categories were liquor, cafes & restaurants and furniture, albeit all were positive in the period.

Australian retail sales rose 4.0% in April 2025 year-on-year. The March-April period has been distorted by the shift of timing of Easter over the past two years. Therefore, the combined March-April results are more relevant and show retail sales growth of 3.6%. The strongest areas are online, pharmacy, beauty and recreational goods. The weakest areas remain liquor, cafes & restaurants and department stores.

We have published our periodical chart pack of retailer performance vs market. See attached PDF.  This market share report provides two insights – 1) which retailers are winning and to what extent. 2) Insights about market structure.  If you would like any of the data in Excel at any point, just contact us.

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 3.6% in February 2025 year-on-year adjusted for the leap year in 2024. The growth rate near 4% has been largely consistent for the past 5 months. Most drivers of spending are becoming more favourable – tax cuts, rate cuts and lower cost of living pressures, which influences our view that retail spending will continue near 4% over 2025.

The Sigma-Chemist Warehouse merger formally completed on 12 February 2025. This report provides our pro-forma updated forecasts and model for the combined entity. We also explore three bull and bear arguments on the stock given its lofty valuation still makes it difficult for us to have anything but a Sell rating.

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.

Chemist Warehouse has provided a trading update for the 1H25 results last week subsequent to shareholder approval of the merger with Sigma Healthcare. The 1H25 results are very strong with profit margins up 138bp (on network sales) in 1H25. What’s driving results? While not disclosed, we estimate more than half comes from higher gross margins with a benefit from the new Sigma supply agreement. We expect FY25e EBIT margins to be up 101bp. We now set our long-term EBIT margin for Chemist Warehouse at 8.2% of network sales compared with 7.4% previously. 

The ACCC has approved the merger between Sigma and Chemist Warehouse. We expect the issuance of new shares to Chemist Warehouse will not be until February 2025 at the earliest and could be in March 2025. For a brief period, the stock could have a float-adjusted market cap of $14 billion. By April 2025, the market will increasingly turn its attention to the fundamental earnings and valuation drivers. The most compelling feature is strong revenue growth of circa 10-12%, with more than half from store count growth. The greatest unknown is where sustainable margins settle.