Over the last 12 months the retail industry has been one of the hardest places to invest.
Unfortunately, given weak consumer sentiment and the lack of wage growth in Australia, I don't expect the situation to change in the near future.
But that doesn't mean that investors ought to avoid investing in the industry altogether. Rather, I think it means investors just have to choose their shares carefully.
Three retail shares that I believe have strong long-term growth potential and are worth considering today are listed below:
Accent Group Ltd (ASX: AX1)
This footwear retailer's shares have been on a tear since the release of a strong half-year result in February. Despite the strong gain, which has left its shares trading at a 52-week high, Accent's shares are still priced at just 16x trailing earnings. While it is no longer the bargain buy it was 12 months ago, I still see a lot of value in its shares thanks to the strength of its licensed brands which only it can sell in Australia. This, its generous dividend yield, and the positive outlook for its Athlete's Foot and HYPE stores, make Accent a great option for investors in my opinion.
Baby Bunting Group Ltd (ASX: BBN)
On Tuesday this baby products retailer advised of further competitor closures. According to the release, both Baby Bounce and Baby Savings have each entered external administration recently. While in the short term these closures may be headwinds due to clearance activities, in the medium to long-term management expects Baby Bunting to benefit from further market share gains. I think it is well worth investors being patient with Baby Bunting and believe it could be a fantastic buy and hold investment after its sizeable decline over the last 12 months.
Lovisa Holdings Ltd (ASX: LOV)
This fast-growing fashion jewellery retailer's shares have come under pressure this month following the surprise resignation of its CEO. While the sudden departure of a CEO never looks good for a company, the departure certainly wasn't performance related. As well as announcing the departure, Lovisa provided a trading update that revealed that its growth had accelerated since its last update. Now things appear to have settled, I think investors ought to take advantage of this recent share price weakness and pick up shares.
