Is this the start of a retail recovery?

Some retailers are reporting growing sales

a woman

Retailers may be recovering, and back on the growth road – if recent results are to be believed.

Fantastic Holdings (ASX: FAN), the owner of Fantastic Furniture, Plush, Dare Gallery, Le Cornu and Original Mattress Factory, says it has seen positive sales growth in the first quarter of 2013 financial year, compared to last year, despite weak consumer spending.

The company says it’s still cautious, but believes that the retail outlook in Australia is gradually improving. The next financial year will continue to be challenging and highly competitive, says Managing Director, Julian Tertini.

Fantastic recorded an 8% increase in net profit after tax for the 2012 financial year, and expects to beat that this year.

Fashion retailer, Country Road (ASX: CTY) has also reported an increase in sales growth, with a 13.5% jump in same store sales in the first four months of the 2013 financial year. The company is 88% owned by South African retailer, Woolworths Holdings (not related to Australia’s Woolworths), and the remaining 12% is owned by Solomon Lew’s private investment company, Australian Retail Investments.

Consumer electronics retailer, JB Hi-Fi Limited (ASX: JBH) announced yesterday that like-for-like sales are down by 2.4%, showing that not all retailers are experiencing a recovery. Still, the company remains confident that it can grow market share, and drive sales through production innovation. A slew of new tech gadgets are also likely to increase sales in the lead up to Christmas, following the launch of Apple’s iPhone 5 and iPad Mini, Microsoft’s newest operation system, Windows 8, and its Surface tablet. Nintendo’s much anticipated Wii U is also coming.

The recent failure of cut-price retailer, Retail Adventures has opened up opportunities for other companies. There are media reports that The Reject Shop (ASX: TRS) has flagged plans to expand in Tasmania, following the financial troubles of its competitor, Chickenfeed, which is owned by Retail Adventures. Chickenfeed has closed 29 stores in Tasmania, and further closures could come. The Reject Shop now plans to open four new stores in Hobart and another two elsewhere in the state by early next year, more than doubling the company’s presence in Tasmania.

Foolish takeaway

With retailers dropping like flies (WOW Sight and Sound, GAME and Retail Adventures), that leaves more room and opportunities for the retailers that are left. As I mentioned recently, there may not be many left, but those that are, will be stronger and more dominant than before.

If you only invest in one company this year, make it our “Top Stock for 2012-13”. Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

More reading

Motley Fool writer/analyst Mike King owns shares in JB Hi-Fi. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »