My take is that the sell-off is because sales are now declining...

My take is that the sell-off is because sales are now declining and at lower GM% (i.e. discounting more heavily, and yet sales still going backwards)

Sales were +16% in Feb (cycling weaker omicron in PCP) to start the half. So to end up at 0.4% for the half, sales in the past few months would be negative mid single digit%

GM% looks weaker at about 36.5%-37.0%. Vs 38-39% in FY19 and FY22

So the trajectory for GM$ is not good, both because of falling sales and falling GM%

They have pulled back costs which is good/needed
- In 1H23 Underlying Costs increased 11% vs 1H22 (normalising for temp store closures in 1H22, per the company's numbers in their interim results investor pres)
- In 2H23 costs looked to have only increased a few % (still increasing but at a lower rate)
I hope the cost cutting isn't all from less store staff on the floor as that will soon impact sales in itself

FY24 earnings will go backwards materially if you assume current negative trends in sales/GM through 1H24 and an improvement to flat growth in 2H24. Tight cost control may offset the big cost inflation (wages, rent), but GM$ going backwards means material operating deleverage. They really need topline sales to turnaround and at a reasonable GM%

On my numbers FY24 EPS of 5cps (12x FY24 PE), assuming:
- 5% sales decline in 1H24 and 0% sales growth in 2H24
- GM% of 36.5-37.0%
- CODB up 2%
It's still a long year ahead though so trading could be better/worse than the above