Woolworths 1Q24 sales revealed good growth in its Australian Food division but weak results in NZ and Big W. Woolworths Food division is the driver of group earnings and valuation and is likely to see a further moderation in sales trends over the next year. There is a risk that the positive mix effect on sales unwinds as consumers react to higher prices and income growth is squeezed.

Harvey Norman provided an encouraging AGM trading update with recovering sales trends in the past two months and continued strong profit margins. Australian sales improved from -19% in July-August to -6% for September-November. Profit margins are holding up well with three-quarters of the gains seen in FY21 retained in 1H22e so far.