Retail sales data: Which retail shares should you buy?

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

According to the data, sales climbed 0.4% month-on-month to $26.56 billion on a seasonally adjusted basis, outperforming the market’s expectations for a 0.3% rise according to Bloomberg.

Which areas of the retail sector performed well?

The standout area was cafes, restaurants and takeaways retailing which rose 1.3% thanks to unusually warm weather during the month.

This could be good news for the likes of KFC operator Collins Foods Ltd (ASX: CKF)Domino’s Pizza Enterprises Ltd (ASX: DMP), and the embattled Retail Food Group Limited (ASX: RFG)

Elsewhere, household goods retailing and food retailing were up 0.7% and 0.3%, respectively, month-on-month. This could be a sign that Nick Scali Limited (ASX: NCK) had a positive trading period.

Which areas didn’t perform well?

One area of the retail sector that dragged on proceedings in April was clothing, footwear and personal accessories retailing which fell 0.8% month-on-month.

The warmer weather during the month appears to have put off consumers from buying their winter clothing. Which could be disappointing news for Kathmandu Holdings Ltd (ASX: KMD).

And once again, much to the dismay of Myer Holdings Ltd (ASX: MYR) shareholders, department stores saw sales decrease 0.9% during the month.

Which retail shares should you buy?

Based on this latest retail sales data I think Domino’s is the standout pick of those mentioned, especially after its shares recently found favour with brokers.

However, outside this data, I still think retail shares such as Lovisa Holdings Ltd (ASX: LOV) and Premier Investments Limited (ASX: PMV) are buys due to their long-term growth potential from expansions overseas.

Both companies have been doing exceptionally well in international markets this year and I expect more of the same in FY 2019 and beyond.

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Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended Domino's Pizza Enterprises 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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