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Why these 2 ASX retailers might get a massive boost

If you haven’t been following the nation’s economic news (I don’t blame you), you might have missed last week’s dismal GDP growth numbers. Economic growth is now the lowest it’s been in Australia since the GFC back in 2009. This obviously isn’t a good sign for ASX companies, with lower economic growth usually indicating depressed consumer spending.

But the Treasurer Josh Frydenberg also said that the numbers for next quarter should be a lot rosier due to the government-issued tax refunds for the 2019 financial year. That got me wondering about which ASX companies will benefit most from consumers spending their tax refunds. Here’s where I landed. 

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi has recently broken its share price all-time high, in my opinion reflecting the underlying quality of this company. JB sells all manner of things, from white goods like fridges to mobile phones, games, DVDs and TVs. I think JB is poised to benefit from the tax refunds – Aussies love a big TV and JB is one of the go-to destinations for TV shoppers. While there, many people might pick up a Blu-Ray box set or even a new Apple iPad to go with it. JB has proved itself capable of keeping its prices cutting-edge and I think it remains a favourite place to burn extra cash.

Premier Investments Limited (ASX: PMV)

Premier Investments is a retailing group who owns the Smiggle, Peter Alexander, Just Jeans, dotti and Jay Jays brands and stores. Smiggle and Peter Alexander in particular are standout stores with formidable branding power. Smiggle offers niche, quirky stationary and is a favourite of school children everywhere. Peter Alexander offers high-end sleepwear such as pyjamas and dressing gowns that are also a hit for young people in particular. I think these two stores in particular are well placed to benefit from the tax refunds that are burning holes in consumers’ pockets.

Foolish takeaway

Although both of these companies might get a sugar hit from these tax refunds, both are also fundamentally very strong companies that have significant brands and presences in the Australian retail space. As this space is under constant attack from online retailing these days, finding top quality retailers is very important and these two are just that, in my view.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments 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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