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”.

Nick Scali delivered 1H26 EBIT of $68.5 million, up 25%. NPAT of $41 million was ahead of both guidance and Visible Alpha consensus. The group gross margin increase of 318bp, surprised to the upside and resulted in 65.4% for the half. Nick Scali’s ANZ trading update for January like-for-like written sales orders at 3.1% highlighted a deterioration in momentum. We have lowered our sales forecasts but lifted gross margin expectations.

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.

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.

Temple & Webster reported sales growth for the first 20 weeks of 18%. The update implied a slowdown from the August trading update from 28% to 14% in the interim to the AGM. Growth of 18% was below Visible Alpha consensus expectation for 1H26e at 23% and the share price response reflected the concerns around retaining sales growth at more than 20%. Temple continues to win share and will eventually reach scale to achieve a higher EBITDA margin, where we forecast 12% for FY40e.

Nick Scali’s AGM guidance was a miss to Visible Alpha consensus for 1H26e. However, the trading update showed strong sales momentum in ANZ and a clear path to breakeven in the UK. The ANZ guidance implies either flat gross margins or elevated costs. Sales momentum will need to continue in a highly promotional environment to offset cost growth. The UK is tracking well to reach breakeven and could exit 2H26e with a small profit. The promotional environment in ANZ presents a risk to gross margins.

Bapcor’s trading update revealed ongoing sales declines and a sharp drop in profit margins for 1H26e. The company’s discovery of poor business practices highlights the complexity in the group and the need to simplify. Based on current trends, sales should stabilise in 2H26e and cost savings are likely to trigger a margin recovery. On our estimates gearing will stay below covenant levels and free cash flow should help reduce debt.

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.

Bapcor reported a 4% decline in EBITDA for FY25. The decline in both the Trade and NZ division’s profit margins was notable in the second-half. We expect the company to have another decline in sales for 1H26e given some store closures and a more competitive environment in Australia and NZ. The NZ segment’s margins look to be resetting lower following a COVID-19 peak. Even so, margins are still healthy relative to peers. The company’s indication that profit will skew to 2H26e is vague. The shape of earnings suggests the profit recovery begins in FY27e.

Nick Scali delivered EBIT of $106 million, down 18%. Gross margins in ANZ were down 100bp but remain elevated on history at 65%. The UK losses at $9.6 million exceeded expectations, with losses guided to continue. Our EPS revisions are a downgrade of 1.6% to FY26e but upgrades of 2.5% and 1.5% to FY27e and FY28e. A large sales uplift is required to break even in the UK, with current conditions supportive domestically. Nick Scali will have to deliver on the UK and on growth in the domestic market.