Reporting season says the Australian consumer is cautious, not capitulating
There’s a consistent view of the consumer emerging from Australia’s Financial year 2026 (FY26) retail reporting season.
Households haven’t stopped spending, but they’ve become more selective, more value-conscious and increasingly willing to postpone discretionary purchases or wait for promotions and sales.
The pressure is most evident in big-ticket categories like furniture, appliances, and homewares. Nick Scali (ASX:NCK) noted a significant decline in store traffic late in the year; JB Hi-Fi (ASX:JBH) mentioned that customers are focusing their purchases around major sales; and Temple & Webster (ASX:TPW) said that while browsing continues, customers are delaying their buying decisions.
Myer has offered perhaps the clearest assessment, pointing to higher fuel prices, three interest rate hikes in 2026, slower household income growth, a weakened housing market, and increased financial uncertainty as limiting factors on household budgets.
The weather has added another complication, particularly for outdoor and winter-related categories.
Despite all of the above, it’s not a story of collapsing consumption. Baby Bunting (ASX: BBN), Dusk (ASX:DSK), Universal Store (ASX:UNI) and Super Retail Group (ASX:SUL) have all started FY27 with positive comparable or direct-to-consumer sales growth.
The read-through for the economy is one of strained rather than broken household demand: consumers will spend, but increasingly when the product, price and occasion justify it. That’s making retail execution, value perception and category exposure unusually important.
- JB Hi-Fi (ASX: JBH)
JB Hi-Fi produced another record year, with FY26 group sales rising 4.8 per cent to $11.06 billion, Earnings Before Interest and Tax (EBIT) reaching $734.4 million and Net Profit After Tax (NPAT) increasing 6.0 per cent on the statutory prior year to $489.9 million. The Australian JB Hi-Fi business generated $7.42 billion of sales, up 4.4 per cent, with comparable sales up 3.2 per cent, while The Good Guys grew sales 2.7 per cent. The more important read-through, however, came after year-end. In July, JB Hi-Fi Australia sales fell 0.5 per cent, with comparable sales down 1.4 per cent, while The Good Guys declined 1.7 per cent on both measures. CEO Nick Wells characterised the environment as uncertain and said customers were increasingly seeking value and shifting expenditure towards major promotional events. Supplier price rises and product shortages in technology have also complicated the picture. In other words, JB Hi Fi remains a highly effective retailer, but even its customers are becoming more price and promotion sensitive.
- Nick Scali (ASX: NCK)
Nick Scali’s FY26 numbers were strong despite a substantially weaker backdrop for furniture. Group revenue increased 4.3 per cent to $516.7 million, while statutory NPAT was $75.7 million, compared with $57.7 million in FY25. Margin improvement and the turnaround of the acquired UK business helped offset much tougher demand conditions in Australia. Executive chairman Anthony Scali said Australian store traffic fell by double digits and was down by as much as 15 per cent in the fourth quarter, with higher living costs, elevated interest rates and weaker housing activity encouraging shoppers to delay major purchases. Written orders across FY26 still rose 2.7 per cent, but fell 3.6 per cent in the second half, and orders in Australia and New Zealand were flat in the first five weeks of FY27. The UK was considerably stronger, with early FY27 written orders up 35 per cent. Nick Scali’s result is perhaps the clearest evidence that big-ticket discretionary spending remains one of the economy’s softer spots.
- Super Retail Group (ASX: SUL)
Super Retail Group – the owner of Supercheap Auto, Rebel, BCF and Macpac – increased FY26 sales 3.2 per cent to $4.2 billion, with like-for-like sales up 1.8 per cent. Normalised NPAT declined 2.8 per cent to $225.9 million and normalised Profit Before Tax (PBT) fell 7.0 per cent to $306.2 million as investment in systems and infrastructure through Project Ignite and higher costs weighed on earnings. Supercheap Auto itself remained resilient, with sales up 3.9 per cent to $1.59 billion and like-for-like sales up 2.7 per cent. Management said fourth-quarter trading was disrupted by fuel-price volatility, adverse conditions for outdoor leisure and a difficult consumer backdrop. Early FY27 is better: group sales for the first seven weeks rose 3.5 per cent, with like-for-like sales up 1.5 per cent and Supercheap Auto up 4.0 per cent like-for-like. Macpac, however, was down 8.9 per cent like-for-like amid mild winter conditions. Looking ahead, Super Retail specifically cited Middle East tensions and fuel prices, rising domestic interest rates, elevated inflation and housing-market pressure as continuing risks to consumer confidence.
- Baby Bunting (ASX: BBN)
Baby Bunting delivered one of the cleaner results of the season. FY26 sales rose 6.5 per cent to a record $556.0 million, comparable sales increased 3.5 per cent and gross margin expanded 100 basis points to a record 41.2 per cent. Statutory NPAT rose 17.5 per cent to $11.2 million, while the company’s preferred pro-forma NPAT measure increased 33.9 per cent to $16.1 million. Management nevertheless said the consumer environment became more difficult through the second half, with higher interest rates and fuel prices weighing particularly on more expensive categories such as prams and car safety. Encouragingly, the first six weeks of FY27 produced 6.1 per cent total sales growth and 4.3 per cent comparable growth. Baby Bunting has guided to FY27 sales of $585-$600 million, comparable growth of 3-5 per cent, a 42 per cent gross margin and pro-forma NPAT of $19-$21 million. That guidance explicitly assumes no significant deterioration in economic or retail conditions or sea-freight costs.
- Temple & Webster (ASX: TPW)
Temple & Webster’s FY26 result shows how quickly a strong historical growth rate can meet a softer macro environment. Revenue rose 11 per cent to a record $665 million and underlying Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) increased 28 per cent to $25.9 million, helped by a deliberate shift towards better unit economics, private-label and exclusive products. But revenue in the first seven weeks of FY27 fell 13 per cent, albeit against an unusually demanding prior-year comparison when revenue had risen 28 per cent. Importantly, contribution-margin dollars were up 10 per cent over the same period. Management said macro conditions had not improved since May and were, if anything, “a little bit worse”. Traffic remains reasonably healthy and customers are still browsing, but conversion has softened slightly and consumers are taking longer to make purchasing decisions. Temple & Webster has declined to give revenue guidance but is targeting FY27 EBITDA of $33-$40 million. It is an important distinction: management does not believe the 13 per cent sales decline should be extrapolated across the year, but it is clearly operating on the assumption that the consumer environment will remain uncertain.
- Universal Store Holdings (ASX: UNI)
Universal Store provides an important counterpoint to the gloomy consumer narrative. FY26 group sales increased 12.9 per cent to $376.1 million, gross margin expanded 140 basis points to 62.5 per cent and underlying NPAT rose 16.3 per cent to $40.5 million. Statutory NPAT fell 21.6 per cent to $18.2 million, but this reflected a $23.8 million non-cash impairment against the Thrills/CTC business. Universal Store sales rose 11.5 per cent and Perfect Stranger sales surged 40.8 per cent. More importantly for the current environment, group direct-to-consumer sales were up 9.1 per cent in the first seven weeks of FY27; Universal Store grew 5.5 per cent, Perfect Stranger 45.8 per cent and Thrills DTC 10.1 per cent. Management’s observation is that its youthful customer “remains willing to spend on quality, on-trend clothing from brands they love”. The company nevertheless expects continuing cost inflation, including higher award and junior wages, freight and energy costs. Universal Store suggests that consumers have not universally closed their wallets: differentiated product and strong brand relevance can still produce growth.
- Dusk Group (ASX: DSK)
Home-fragrance retailer Dusk also bucked the subdued retail backdrop. FY26 sales increased 8.4 per cent to $148.9 million, like-for-like sales rose 7.8 per cent and statutory NPAT increased 23.1 per cent to $5.4 million. Online sales grew 16.9 per cent, while membership of Dusk Rewards increased 18 per cent to 768,000. CEO Vlad Yakubson explicitly described the broader retail environment as “subdued”, arguing that the company’s improved result reflected product rejuvenation, better availability, successful seasonal ranges and execution rather than an easy consumer backdrop. That momentum has continued: in the first seven weeks of FY27, total sales were up 2.7 per cent and like-for-like sales rose 5.4 per cent, aided by improved ranging and stock availability. Dusk did not provide a quantified FY27 earnings forecast in the material I could verify. Its result reinforces the broader theme that soft consumer conditions need not translate mechanically into declining retail sales when a company is simultaneously improving its proposition.
- Step One Clothing (ASX: STP)
Step One sits at the opposite end of the spectrum and illustrates the difficulty of separating macro weakness from company-specific strategy. Revenue fell 26.7 per cent to $63.7 million as management deliberately withdrew from the very heavy discounting that had previously supported sales. The company reported an EBITDA loss of $7.4 million, although adjusted EBITDA excluding a $9.1 million inventory-obsolescence provision was a $1.7 million profit. The reported loss after tax was $6.4 million and adjusted profit after tax was $0.8 million. Australian revenue was particularly weak, falling 36.1 per cent, compared with an 11.1 per cent decline in the UK. CEO Greg Taylor acknowledged that consumers are under cost-of-living pressure, but stressed that Step One’s principal objective is rebuilding full-price demand rather than chasing volume with discounts. Management has not issued FY27 financial guidance, and I could not verify a quantified July/August sales update in the FY26 result materials. Step One therefore offers less clean evidence about the economy than some peers: much of its sales decline was a deliberate consequence of its own pricing reset.
- Myer Holdings (ASX: MYR) – preliminary and unaudited
Myer’s 27 July update is preliminary and unaudited, so these numbers should not be treated as final FY26 results. For the 12 months ending 25 July, total sales were provisionally $4.089 billion, up 11.3 per cent on an actual basis because FY26 included a full year of the Apparel Brands acquisition. The more meaningful pro-forma comparison showed sales growth of only 0.3 per cent, with group comparable sales up 0.7 per cent. Pro-forma operating gross profit is expected to decline 2.1-2.5 per cent as heavier-than-planned promotional activity was required to stimulate demand. Myer provided unusually direct macro commentary: it said sustained cost-of-living pressure had pushed consumer sentiment to its lowest levels in recent times, and cited higher fuel prices resulting from Middle East conflict, three interest-rate increases during calendar 2026, slower household income growth, a weaker housing market and broader household financial uncertainty. June and July were particularly weak, with warmer-than-average winter weather another headwind. Because Myer’s financial year ends on 25 July, that July weakness is part of FY26 rather than a separate FY27 trading update. The company’s near-term consumer outlook remains cautious.
- Michael Hill International (ASX/NZX: MHJ) – FY26 trading update, not final accounts
Michael Hill’s 31 July announcement was an FY26 trading update, not the completed FY26 financial statements, so its earnings figure remains an expectation rather than a final reported number. Group sales increased 2.0 per cent to $654.7 million, with sales growing across Australia, Canada and New Zealand. Same-store sales were also positive across all three markets, with Canada the standout. Michael Hill indicated that comparable EBIT would be in a range of $22-$24 million, representing a substantial improvement on FY25. CEO Jonathan Waecker said the operating environment remained “dynamic”, but pointed to the benefits of simplifying the group and concentrating resources on Michael Hill and Bevilles. The business is entering FY27 with what management described as a clearer strategy and confidence in the opportunities ahead. Unlike JB Hi-Fi, Super Retail, Dusk, Baby Bunting and Universal Store, however, I could not verify a separate quantified post-year FY27 sales update from Michael Hill’s 31 July release. Until the full accounts are released, the EBIT range should be regarded as provisional.
What investors should take from the retailers’ results so far
It seems there are three messages worth drawing from the results as a whole.
Firstly, Australian consumers are facing greater pressure than they did a year ago. Foot traffic in furniture stores has decreased, sales of electronics and appliances have slowed, and customers for homeware products are postponing their purchases. Meanwhile, general retailers are increasing their promotional efforts. Management frequently cites rising interest rates, fuel prices, a weak housing market, and rising living costs as ongoing challenges.
Second, these results do not show a widespread decline in consumption. Early FY27 trading at Super Retail Group, Baby Bunting, Universal Store, and Dusk remains strong, with several retailers still increasing margins and gaining market share.
Third, consumers have become very selective. Companies that provide clear value, unique products, or compelling reasons to buy – instead of depending solely on overall category growth – are doing better. For investors, this earnings season is less about judging the overall consumer and more about identifying which retailers truly have pricing power, strong brand relevance, and operational discipline.
Disclaimer:
The Montgomery Small Companies Fund owns shares in Nick Scali. This video was prepared 21 August 2026 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade Nick Scali, you should seek financial advice.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
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.
