Woolworths reported 14% EBIT growth for 1H26, helped by improving sales trends and more consistent execution across its divisions. While a good result, there was a low base in the previous corresponding half. Woolworths sales trends may slow from here and the margin gains in eCommerce and Digital & media will be difficult to repeat. The outlook for FY26e through to FY28e is good as margins recover further and supply chain investments deliver a return. The PE premium to Coles is back to its long-term average.

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.

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.

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.

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.

Australian retail sales rose 6.2% in October 2025 year-on-year, a surprise given our feedback of modest spending in October in what felt like anticipation of Black Friday deals. The theme of a strong consumer continued from the National Accounts update for the September quarter in which household income was revised higher. Higher house prices and improved savings rates are buffering the consumer with sentiment trending higher.

The 2025 festive season is shaping up as a good one for consumers. They are opening their wallets and buying bargains. The challenge for retailers is the spend is not evenly distributed. Consumers bought more in November and may buy less in December. We have had positive sales feedback for furniture, auto and online and expect these to do well over 1H26e. At the other end of the spectrum, we have had weak sales feedback on footwear and liquor. The challenge for electronics is lapping incredibly good growth from November and December 2024. Using Visible Alpha consensus as the reference point, we see downside risk to sales for JB Hi-Fi, Harvey Norman and Endeavour. Retail has been more promotional and 1H26e risks to gross margin also exist. At EPS, we see downside risk for Accent, JB Hi-Fi, Endeavour Group and Myer. For those wanting a more light-hearted take, further down we have our Christmas gift ideas.

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.