Feedback on footwear category sales indicates soft trading conditions continue, making it one of the weakest retail categories. Analysis of Accent Group’s promotional discounting shows consistently deeper discounts since its AGM. We lower our sales expectations but lift our gross margin forecasts because the discounting has not deteriorated.

Nick Scali has provided a Christmas trading update that guides for ANZ sales to grow 10% to 12% in 1H26e. Group net profit after tax guidance has also been upgraded to between $37 and $39 million. The better sales performance in ANZ has driven the upgrade. We lift our revenue forecasts and gross margin expectations, reflecting the supportive backdrop domestically which we expect to slow post FY26e.

Myer reported total sales growth of 3.0% for the first 19 weeks of trade for 1H26e. With Visible Alpha consensus expectations of 2.2% for 1H26e we expect upward revisions to consensus sales. Commentary around costs suggested expenses continue to be tightly managed. The stronger than expected growth came from lower gross margin categories such as concessions and homewares.

Accent Group’s AGM trading update reported like-for-like sales turning negative for the first 20 weeks, a slowing on the +0.8% for the first seven weeks of FY26e. EBIT guidance was provided which was below Visible Alpha consensus for both 1H26e and FY26e. The elevated promotional environment and resulting gross margin impact as well as slower than expected like-for-like sales growth were identified as contributing factors to the earnings impact.

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.

The link provides a presentation associated with a webinar we held. The webinar addressed our retail sales forecasts for FY26. We addressed the crucial time for retailers that is the festive season and how trends may shift across retail categories. While the macro-economic backdrop is conducive, what will it take to see stronger sales growth?  

The festive season will ramp-up for retailers in the next few weeks. The consumers’ embrace of Black Friday has resulted in November sales now representing a bigger share of the annual calendar in Australia compared with the US, UK and NZ. The timing and high base makes it difficult to see a strong festive sales period in 2025. We forecast non-food sales to rise 4.0%, a slight dip on recent trends. While the sales backdrop will be decent, the risk is retailers discount earlier this year given higher inventory for some. We highlight Accent Group and Lovisa as retailers with elevated inventory levels.

This chart pack provides subscribers with insights about the retail operating environment and outlook for sales, gross margins and operating leverage. The chart pack has been compiled post the FY25 reporting season across the retail market providing fresh insights about the sector.

Myer reported an FY25 EBIT of $140 million, down 14% and inclusive of six-months from Apparel Brand. On a pro-forma basis Myer Group EBIT for FY25 was $174 million, down 30%. Sales trends are showing modest improvement. We expect flat gross margins from continued promotional pressure. We forecast cost growth of 3.6% to result in EBIT down 2% for FY26e (on a pro-forma basis). Shareholders will need patience. Myer will need to deliver on synergies which are largely expected in FY27e.

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.