Retail trading in the festive December 2025 period was weaker than expected after a robust November 2025 performance driven by Black Friday sales, Jefferies said in a note on Tuesday.

Consumer sentiment was dragged down by a pull-forward demand, early discounting, and trading calendar effects with Christmas falling on a Thursday, amid concerns of potential rate hikes.

The Bondi Tragedy, which involved a mass shooting at Bondi Beach in Sydney that resulted in 16 fatalities, also negatively impacted the sentiments around that time.

The investment firm said Boxing Day discounts also started well before Christmas, putting pressure on margins.

Jefferies downgraded Harvey Norman (ASX:HVN) to buy from hold, citing deteriorating market conditions that leave the retailer not immune despite its large market share. It also lowered the price target to AU$7.60 from AU$8.40.

However, Harvey Norman outperformed JB Hi-Fi (ASX:JBH) and The Good Guys, leading stronger sales in the personal computer and television categories.