Analysts at Morningstar expect softening Australian demand and intense competition to impact near-term earnings of specialty retailer Premier Investments (ASX:PMV).

Apparel retailers have increased discounting to move seasonal stock with demand waning, which is hurting their gross margins.

Morningstar states that consumers have been curtailing non-discretionary spending significantly.

PMV’s apparel sales in Australia and New Zealand are expected to drop by 13% in H2 FY23.

The brokerage’s earnings estimate for PMV is 13% below median FactSet consensus.