Australian retailers have had a decent Christmas in 2023, particularly compared with low expectations amongst retailers and investors. Supermarkets traded solidly and electronics demand improved from very weak levels. Liquor and apparel are still trending at very low rates of growth. There is consensus upgrade risk to retailers, particularly Harvey Norman and Super Retail Group. While sales trends are slightly better, the strength of gross margin is the most significant driver of better earnings. The retailer where feedback has shifted most positively is Harvey Norman.

Australian retail sales growth for October 2022 was 12.0% year-on-year. This is still elevated given part of the month was impacted by lockdowns last year. Once again, three-year CAGR growth rates are more relevant. On that basis, recreational goods, liquor and department stores slowed. It is important to note, we will be back to single-digit industry sales growth in November given the very high base line from 2021. A more noticeable slowdown will be evident in the June quarter 2023.