Morgan Stanley on the lookout for signs of consumer recovery during August earnings season
Morgan Stanley analysts will look for signs of a broader consumer recovery during the August earnings season, noting rate cuts have helped ease cost-of-living pressures but the impact on spending had so far been moderate.
In a research note to clients overnight Tuesday, the investment bank indicated it would keep an eye on retailers’ sales and margin trajectories for the 2026 financial year.
The analysts noted while the consumer outlook was more “constructive”, several retailers have called out incremental weakness and softer trading conditions. They include Accent Group, Myer, Super Retail Group, Bapcor, KMD Brands and Adairs.
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By continuing you agree to our Terms and Privacy Policy.Category trends are also in focus for the upcoming earnings season, with weakness in apparel and alcohol compared with growth in electronics.
Morgan Stanley has an “overweight” rating on Sigma Healthcare versus an “equal weight” rating on Endeavour Group — owner of Dan Murphy’s and BWS — as consumers continued to prioritise health and wellness.
“Decline in traditional quick-service restaurant performance and alcohol consumption is increasingly appearing more structural than cyclical as consumer preferences shift toward healthier options,” it said.
Morgan Stanley says while household incomes will improve through 2025 and 2026, it expects a cautious response from spending.
It added flow through from additional rate cuts was required before there was meaningful turnaround in consumer sentiment.
Electronics giant JB Hi-Fi — also behind The Good Guys — will kick off the first full week of earnings season when it reports 2025 financial year results on August 11.
The last week of August is shaping up to be jam-packed, with Endeavour, Coles, Woolworths, Domino’s Pizza, Wesfarmers and Harvey Norman among the major retailers reporting.
It comes as National Australia Bank on Wednesday revealed online retail sales grew 2.6 per cent month-on-month in June.
All States recorded growth in June, with a strong rebound for South Australia, WA and Tasmania — all of which posted a drop in May.
The bank estimates in the 12 months to June, Australians spent just over $64 billion on online retail.
The Australian Bureau of Statistics will release retail trade data for June on Thursday.
