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Should you buy these popular retail shares?

The retail sector is certainly not the easiest place to invest, but I believe it is well worth having a little exposure to it in your portfolio.

The big question, though, is which retail shares should you buy. Are these three retailers in the buy zone?

Accent Group Ltd (ASX: AX1)

I think this footwear retailer could be worth considering after its strong performance in FY 2018 and positive start to the current financial year. Accent delivered a 17.9% increase in net profit after tax to $47.1 million thanks to a combination of strong online sales growth and a significant improvement in its gross profit margin. The latter was achieved through vertical brand sales and reduced discounting. It has been a case of so far so good in FY 2019 with the company tracking ahead of its like for like sales growth targets. I believe this is pointing to another solid profit result this year.

Kogan.com Ltd (ASX: KGN)

This ecommerce company’s shares have fallen significantly over the last few months, bringing them down to a very attractive level in my opinion. This decline has been driven largely by heavy insider selling and the lack of guidance or a trading update with its full year results last month. While I do have concerns with the lack of a trading update, I think its shares have pulled back and de-risked things significantly. Because of this, I feel now could be a great time to consider picking up shares.

Myer Holdings Ltd (ASX: MYR)

Earlier this month this department store operator released its full year results and revealed a reported loss after tax of $485.8 million. While this massive loss was attributable to implementation costs and individually significant items, its normalised result wasn’t much better. Profits pre-implementation costs fell 52.2% to $32.5 million. I’m not expecting much improvement in FY 2019 so I plan to stay away. However, recent news that WAM Capital Limited (ASX: WAM) has built up a substantial stake in the embattled retailer has piqued my interest. WAM does have a strong track record of investing successfully in beaten down retail shares.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Kogan.com ltd. 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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