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Why these top retail shares could be market-beaters

Low wage growth, changing consumer habits, and weak consumer sentiment have resulted in tough trading conditions for many retailers this year.

While this has led to some retailers such as JB Hi-Fi Limited (ASX: JBH) and Myer Holdings Ltd (ASX: MYR) struggling, others have continued to perform well.

Three retail shares at the top of their game right now are listed below:

Accent Group Ltd (ASX: AX1)

Accent Group is the company behind retail chains including The Athlete’s Foot, Platypus, and HYPEDC. In FY 2018 Accent Group delivered a 17.9% increase in full year net profit after tax to $47.1 million thanks to solid online sales and same store sales growth. The good news is that FY 2019 started strongly for the retailer. When releasing its full year results, management advised that it is tracking ahead of its same store sales growth targets so far this year.

Baby Bunting Group Ltd (ASX: BBN)

While Baby Bunting had a difficult time in FY 2018, this was due to the closure of four of its biggest competitors and their subsequent clearance activities. The good news is that conditions appear to have eased now, putting Baby Bunting in a great position to gobble up the vacated market share. In fact, a recent note out of Morgans revealed that the broker believes the retailer could grow its share of the market from 12.6% to 20% in the coming years. This may not just result in strong sales growth, but the increasing purchasing power and lower competition could lead to widening margins and strong profit growth.

Super Retail Group Ltd (ASX: SUL)

Super Retail was a strong performer during earnings season. It posted a 26% increase in net profit after tax to $128.3 million in FY 2018 thanks to positive performances across the majority of its portfolio. The good news is that management revealed that the company has had a solid start to FY 2019, which I believe puts it in a position to deliver further earnings growth this year. This could make it a great option for investors, especially given the low multiples its shares trade on and the generous dividend yield they offer.

Here's another share I think could be a market-beater in FY 2019 if you buy it at current levels.

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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 Super Retail Group Limited. The Motley Fool Australia has recommended Accent Group. 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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