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.

Lovisa reported 1H26 EBIT on an underlying basis (ex-Jewells) of $109 million, up 20%. Underlying gross margin improved 50bp to 82.9% and store growth of 64 stores took the store count to 1,095 stores. Total sales in the first six weeks of 2H26e grew 21.5%. Our sales forecasts lift on store count. We lift gross margin expectation but also increase both operating costs and depreciation. The result was impacted by losses in Jewells, Lovisa’s new brand. Jewells may develop into a long-term opportunity but could distract management from course correcting Australian division performance and managing the global Lovisa rollout.

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.

Lovisa will hold its Annual General Meeting on 21 November. In the past Lovisa has provided an update on LFL sales and store numbers. Visible Alpha consensus has 1H26e LFL sales of 5.4%, implying a modest slowing from the first eight weeks of trade. We expect to see a LFL number above 5.3% supported by the US segment where price rises and competitor disruptions have benefitted sales. Our concern is that the LFL sales growth fades in FY27e to 2% as the US benefits are cycled and domestic competitive pressures grow.

Lovisa reported FY25 EBIT of $139 million, up 8%. Gross margins improved 100bp, to 82.0%. The trading update of 5.6% comparable sales growth was an acceleration on the strong 2H25. We lift our sales and gross margin forecasts but also our cost assumptions given 27% cost growth in 2H25.

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.

Premier Retail reported 1H25 sales down 1% and EBIT fell 20%, including the impact of the Peter Alexander’s UK expansion. We forecast sales growth of 4.5% in 2H25e with a smaller gross margin decline. Cost growth will continue, leading to EBIT margins dropping by 778bp to 21.9% for FY25e. Premier Investments will continue to focus on improving Smiggle’s performance which is showing early signs of improvement.

Lovisa reported 1H25 EBIT of $90 million, up 11%, slightly below consensus estimates of $92 million. With revenue growth stunted by flat comparable sales, gross margin was the standout, hitting a record 82.4% (up 170bp). The trading update signaled an improvement in trading momentum with LFL at 3.7% and the company is confident that the store rollout will reaccelerate. Cost growth gives us pause. Gross margins need to be maintained to offset cost growth if comparable sales don’t deliver, which is difficult with increasing competition. Given the lack of traction in Asia, we have removed the probability of an accelerated China rollout.

Premier Investments’ trading update highlights negative operating leverage to soft sales trends.  Premier Retail expects sales to fall 2% with EBIT down 21% at the mid-point of guidance.  The surprise in this result is the inability to cut costs given weak sales. Perhaps there are fewer variable costs that can be cut without damaging sales.