Periodic/Sector reports
Retail: Home Improvement Retail Earnings To Surge In 2Q26
MARKET WEIGHT (Maintained)
Analyst
Highlights
- We expect 2Q26 earnings for the home Improvement retail segment to rise 25% yoy, driven by improving SSSG, gross margin expansion and lower interest expenses.
- Upgrade DOHOME to BUY with a target price of Bt4.50 (from Bt3.60). We expect DOHOME to be the only retailer to deliver positive SSSG in 3Q26.
- Maintain MARKET WEIGHT on the retail sector and OVERWEIGHT on the home improvement retail segment. Our top pick is GLOBAL.
Analysis
- Earnings to surge. We expect 2Q26 earnings for the home Improvement retail segment to reach Bt2.59b, up 25% yoy and 5% qoq, driven by: a) improving SSSG, b) gross margin expansion, and c) lower interest expenses. DOHOME is expected to deliver the strongest earnings growth at 78% yoy, supported by the low base in 2Q25. GLOBAL's earnings are forecast to rise 40% yoy, driven by stronger gross margins and lower interest expenses. HMPRO is expected to post the slowest earnings growth, reflecting a more modest gross margin expansion.
- Impressive margin expansion. We expect the home Improvement segment's 2Q26 gross margin to expand 171bp yoy to 25.8% (2Q25: 24.1%, 1Q26: 24.9%), driven by: a) higher selling prices while benefitting from lower-cost inventory, and b) a higher private-brand sales mix. For all three retailers, gross margin peaked in Apr 26 before easing in May-Jun 26, but remained above pre-Hormuz closure levels. Meanwhile, SG&A-to-sales is expected to increase 40bp yoy to 18.7% (2Q25: 18.3%, 1Q26: 17.7%), mainly due to higher depreciation from store expansion and higher diesel prices. Interest expenses are expected to decline yoy and qoq across all three retailers.
- DOHOME to outperform on SSSG. We expect DOHOME's 2Q26 SSSG to outperform peers at 2.5% yoy (peers: 0.2% yoy). Stronger sales momentum in its wholesale business, supported by the low base from the steel shortage in 2Q25, is expected to be the key driver of its SSSG outperformance.
- Higher private-brand contribution at HMPRO and GLOBAL. We expect HMPRO and GLOBAL to report a higher private-brand sales mix following product price increases, supporting a yoy gross margin expansion in 2Q26. In contrast, DOHOME is expected to report a lower private-brand contribution, as wholesale sales are likely to account for a larger share of revenue.
Highlights
- We expect 2Q26 earnings for the home Improvement retail segment to rise 25% yoy, driven by improving SSSG, gross margin expansion and lower interest expenses.
- Upgrade DOHOME to BUY with a target price of Bt4.50 (from Bt3.60). We expect DOHOME to be the only retailer to deliver positive SSSG in 3Q26.
- Maintain MARKET WEIGHT on the retail sector and OVERWEIGHT on the home improvement retail segment. Our top pick is GLOBAL.
Analysis
- Earnings to surge. We expect 2Q26 earnings for the home Improvement retail segment to reach Bt2.59b, up 25% yoy and 5% qoq, driven by: a) improving SSSG, b) gross margin expansion, and c) lower interest expenses. DOHOME is expected to deliver the strongest earnings growth at 78% yoy, supported by the low base in 2Q25. GLOBAL's earnings are forecast to rise 40% yoy, driven by stronger gross margins and lower interest expenses. HMPRO is expected to post the slowest earnings growth, reflecting a more modest gross margin expansion.
- Impressive margin expansion. We expect the home Improvement segment's 2Q26 gross margin to expand 171bp yoy to 25.8% (2Q25: 24.1%, 1Q26: 24.9%), driven by: a) higher selling prices while benefitting from lower-cost inventory, and b) a higher private-brand sales mix. For all three retailers, gross margin peaked in Apr 26 before easing in May-Jun 26, but remained above pre-Hormuz closure levels. Meanwhile, SG&A-to-sales is expected to increase 40bp yoy to 18.7% (2Q25: 18.3%, 1Q26: 17.7%), mainly due to higher depreciation from store expansion and higher diesel prices. Interest expenses are expected to decline yoy and qoq across all three retailers.
- DOHOME to outperform on SSSG. We expect DOHOME's 2Q26 SSSG to outperform peers at 2.5% yoy (peers: 0.2% yoy). Stronger sales momentum in its wholesale business, supported by the low base from the steel shortage in 2Q25, is expected to be the key driver of its SSSG outperformance.
- Higher private-brand contribution at HMPRO and GLOBAL. We expect HMPRO and GLOBAL to report a higher private-brand sales mix following product price increases, supporting a yoy gross margin expansion in 2Q26. In contrast, DOHOME is expected to report a lower private-brand contribution, as wholesale sales are likely to account for a larger share of revenue.
MARKET WEIGHT (Maintained)
Analyst
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