Retail sales data disappoints: Which shares are the winners and losers?

This morning the Australian Bureau of Statistics released its retail sales data for January.

According to the release, sales grew 0.1% to $2,623 million in January in seasonally adjusted terms. This was well below economists’ forecasts for an increase of 0.4%. On an annual basis this means that retail sales have grown 2.1%.

Not all areas of the retail sector performed so poorly. The best performing area was other retailing which rose 1%. This vaguely named area of the market includes pharmaceutical, cosmetic, and toiletry goods retailing, which all performed well. Whereas recreational goods retailing acted as a drag during the month.

This could be interpreted as a positive for the likes of Sigma Healthcare Ltd (ASX: SIG), Australian Pharmaceutical Industries Ltd (ASX: API), and BWX Ltd (ASX: BWX), but potentially a negative for Super Retail Group Ltd (ASX: SUL).

Two of the worst performing areas of the retail sector during January were clothing, footwear, and personal accessories and department stores.

The former saw sales decline 0.7% during January and the latter experienced a 0.6% decline in sales.

Unfortunately, any hope that the Myer Holdings Ltd (ASX: MYR) performance had improved since Christmas is likely to have been dismissed with this data. This is one area of the market which I think investors ought to avoid.

Finally, household goods and cafes, restaurants, and takeaways experienced an increase of 0.1%, whilst food retailing was relatively unchanged. Making it a reasonably average month for the likes of Domino’s Pizza Enterprises Ltd. (ASX: DMP), Woolworths Group Ltd (ASX: WOW), and Wesfarmers Ltd (ASX: WES).

Foolish takeaway

Out of all the retail shares mentioned throughout I would pick BWX as my first preference. I think its cheaper price and solid long-term growth prospects make it worth considering today.

Alternatively, these non-retail shares could be even better investments in 2018.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX Limited and Wesfarmers Limited. The Motley Fool Australia owns shares of Super Retail Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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