Johannes Faul: Relationship status is complicated right now for the supermarkets. And the reason why that is, is because we're having three overlapping effects, all interacting and impacting earnings and sales in this current financial year, fiscal 2023.

The big headline that's getting a lot of attention is the food price inflation that we're seeing accelerating in F '23 or at least in the first half across supermarkets. And that's front of line of many consumers and also front of mind therefore for many investors. But two other things that are playing out at the same time, and which makes it complicated is we are coming off very high demand for food products that are consumed at home and we're coming out of COVID things are normalising. Patrons are returning to pubs and restaurants, and food is increasingly consumed outside of the house. So that's happening, which will impact demand and sales at Woollies and Coles.

The other thing, the third thing that's also happening, is that Woolworths and Coles had a lot of costs, coming in because of COVID, because they had a lot of workers missing, so absenteeism, they had their supply chains massively disrupted and we're talking about COVID costs in the hundreds of millions at the two supermarkets. So you can see positives and negatives. It's coming through in 2023, so COVID costs will come out of their businesses, but the overall demand will most likely decline somewhat after now the economy is reopened.

And the third theme really is that inflation piece, that a lot of people are thinking about. All up, what we see for the supermarket operators in fiscal 2023 is a muted top line growth in low single digits and the profitability of those sales or the EBIT margins to decline slightly in this current fiscal year. But looking beyond the next 12 months, we think the supermarket industry will normalise, will return to its old growth patterns, which basically means we're going to see EPS growth in the vicinity of 4% year-over-year over the next decade and that underpins our investment thesis, for both supermarkets Woolworths and Coles.