Discretionary Retail: AGM preview - Sales momentum stalling, but value exists for the patient investor

About the author:

Author name:

By Alexander Mees

Job title:

Co-Head of Research and Senior Analyst

Date posted:

10 October 2023, 7:30 AM

Sectors Covered:

Gaming and Retail

• It is a difficult environment for all discretionary retailers in Australia. A long period of inflationary pressure on the cost of living has sapped consumer demand and exacerbated uncertainty about future trading patterns. We believe few investors expect the upcoming AGM season to reveal anything more than a confirmation that sales momentum has slowed and the pressure on margins is intensifying. The market is clearly focused more on macroeconomic factors than company-specific data, but this year’s AGM trading updates may just serve up some surprises that underline our view that there are some real value opportunities in the sector.
• In this note, we preview our expectations for AGMs across our discretionary retail coverage. For each company, we indicate our forecasts for the trading data to be provided and flag whether we believe the AGM will serve as a positive, neutral or negative catalyst. There are no changes to our estimates, price target or recommendations in this note.
• We highlight the AGMs of Baby Bunting (10 October) and Domino’s Pizza Enterprises (2 November) as key potential positive catalyst events. We highlight JB Hi-Fi’s AGM (26 October) as a key potential negative catalyst.

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