The ingredients are in place for Aussie consumers to “rein it in”
As I have written many times, Australia’s Household Debt to Disposable Income Ratio has jumped more than fourfold to around 180 per cent over the past 50 years, making us one of the more indebted societies of the 38 Organisation for Economic Co-operation and Development (OECD) countries.
Preeminent financial journalist of many decades, Robert Gottliebsen, recently argued a 10 per cent decline in house prices was the equivalent to around three 0.25 per cent interest rate increases for the average Australian consumer.
The Reserve Bank of Australia (RBA) increased their cash rate from 3.60 per cent to 4.35 per cent with three 0.25 per cent increases in the three months to May 2026.
And if we add the price of fuel (U.S./Iran War) and energy, and an unfriendly Commonwealth Government Budget presented by Treasurer Jim Chalmers on 12 May 2026, and the Federal Government Debt hitting the $1 trillion milestone today, we have all the ingredients for continuing negative real (after inflation) Gross Domestic Product (GDP) per capita (per person).
Following my blog ‘JB Hi Fi – a difficult environment with negative like-for-like sales over recent months’ (ASX: JBH), two more consumer-related stocks, Super Retail Group (ASX: SUL) and Temple and Webster (ASX: TPW), have reported their results to June 2026 and it appears Super Retail Group’s business model has been relatively resilient. In reaction to their results announcement, the share price for JB Hi Fi was 12 per cent lower to $71.65 (Monday), for Super Retail Group it was up 16 per cent to $14.62, and for Temple and Webster it declined 18 per cent to $4.15
Super Retail Group’s brands include Supercheap Auto (362 stores), Rebel (162 stores), BCF (170 stores) and Macpac (103 stores). They currently have 800 stores across ANZ and 7 distribution centres. Revenue for the year June 2026 increased by 3 per cent to $4.2 billion, with like-for-like sales growth decelerating from 2.5 per cent in the December 2025 half-year to 1.1 per cent in the June 2026 half-year. Normalised Profit Before Tax (NPAT) declined 7 per cent from $329 million to $306 million and the normalised Profit Before Tax (PBT) to Sales ratio came down from 8.1 per cent in Fiscal 2025 (and a peak of 10.3 per cent in Fiscal 2023) to 7.3 per cent.
Like-for-like sales growth in the first 7 weeks of Fiscal 2027 was 1.5 per cent, and with the contribution from new stores, total sales growth has been running at 3.5 per cent.
Temple and Webster recorded an 11 per cent jump in sales to $665 million and a 10 per cent increase in adjusted Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) to $26.1 million for the year to June 2026, a margin of 3.9 per cent.
On one hand, management’s target for Fiscal 2027 is for EBITDA to grow very strongly to a range of $33-$40 million, and an EBITDA/Sales ratio of 5-6 per cent (implying relatively flat revenue). However, on the other hand, “financial year-to-date trading (on a revenue basis) is down 13 per cent”. Management notes that Temple and Webster are cycling 28 per cent growth at the start of FY26.
Australia’s heavily indebted consumers are facing mounting pressure from higher interest rates, cost-of-living pressures, weaker house prices and a difficult economic backdrop, creating the conditions for households to rein in discretionary spending. Recent results from JB Hi-Fi, Super Retail Group and Temple & Webster highlight this increasingly challenging environment, although the impact has been uneven. Super Retail Group has remained relatively resilient, while weaker recent trading at JB Hi-Fi and Temple & Webster suggests consumers are becoming more cautious with their spending.
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 40 years of industry experience.
David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
