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.

Accent Group reported 1H26 EBIT of $57m, down 30%. Underlying gross margin of 54.3% was down 130bp. The trading update for the first eight weeks was flat. We have rebased our forecasts for FY27e on the proforma earnings base of FY26e which strips out the exit of Glue Store and OzSale. We lower our sales forecasts on closures and lift our gross margin and cost of doing business forecasts. A Strategy Day will be held in May 2026 to provide an update on growth priorities.

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.

Sales grew 5% in 1H26 (MSTe +3.8%) and 17.8% in the first six weeks of 2H26e. Gross margins at 65.2% were +3bp in 1H26 (MSTe 63.1%), and management guided to flat gross margins on pcp for 2H26e. Given the early success of the “AfterGlow” store format, management plan to accelerate the new store concept rollout with “mini refurbs”.

Temple & Webster reported 1H26 EBITDA of $13.5 million, up 2.2%. The EBITDA margin of 3.6% for 1H26 was within the guidance range of 3-5%, but on the low end, as promotional activity was used to drive a sales outcome. We lift our sales forecasts but lower our delivered margin to reflect a more promotional environment. The Temple & Webster model continues to deliver market share gains and over time scale will drive margin improvement.

Super Retail Group has earnings upside in Rebel and from its new Victorian distribution centre. The addition of a currency tailwind for cost of goods in FY27e supports solid EPS growth. We estimate a 10% lift in the Australian dollar could be a $30 million, or 8% EBIT benefit. It is a 71bp boost to gross margins. While there is some uncertainty given changeover of CEO and a new three-year strategy plan coming, we expect the plan to have few surprises.

Viva reported a lift in group fuel volumes, better gross margins in its convenience stores and higher refining margin in 4Q25. While all these signs are encouraging, the refining margin increase was smaller than Ampol’s given maintenance and power outages. Moreover, the improvement in convenience gross margin was made on a lower sales base. Viva’s cost savings seem to be flowing through but the company will need to show a more meaningful lift in sales from the OTR conversions in order to see any re-rating.

The link provides a presentation associated with a webinar we held. The webinar addressed our retail sales forecasts for 2026. We addressed the outlook for the Australian retail sector in 2026 and beyond. The sector had a strong finish to 2025 but the outlook is more hazy with risks to both sales momentum and gross margins emerging. 

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.

We have gathered feedback from a range of retail industry contacts to gauge the initial read on Christmas trading. In short, sales trends have been good. It was a strong Black Friday month in November, early December was soft, but there was a noticeable improvement in sales in the last two weeks of December. Strongest feedback is for Chemist Warehouse and the furniture industry. The weakest feedback is in footwear and liquor, albeit Endeavour Group has won share. Woolworths had a strong December quarter, which largely reflects strikes from the pcp. Its underlying performance looks to be still lagging a little. The key risk for 1H26e will be gross margin. When we combine the sales and margin feedback, the EPS upside risk to consensus could come from Super Retail Group and Sigma. There is downside risk for JB Hi-Fi, Endeavour and Myer in our view.