Tough conditions: Are any ASX retail shares investable?

The retail sector is really tough at the moment, are any ASX retail shares investable?

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One of the toughest industries to make any decent money is retail.

Local suburb shops are really struggling and large ASX retail businesses aren't finding it much easier.

According to reporting by News.com.au, yet another retailer has gone bust. Women's fashion brand Bardot is the latest one to get into financial strife, putting 72 stores and 800 staff in danger.

It joins a line of other retailers in Australia to get into trouble this year including Criniti's, Ed Harry, Skins, Napoleon Perdis, Shoes of Prey, Karen Millen, Benny Burger, Zanui and Muscle Coach.

There are always going to be some businesses that struggle. Not every retailer is going to be successful simultaneously. Trends change, some brands get old, some retailers don't invest in their stores and so on. Scentre Group (ASX: SCG) centres are full of clothes stores, I sometimes ask myself how can they all be sustainably profitable?

ASX retailers have been having difficulty growing revenue. Nick Scali Limited (ASX: NCK) has said same store sales are going backwards. Reject Shop Ltd (ASX: TRS) is struggling to gain traction. Kmart Group (which includes Target) within Wesfarmers Ltd (ASX: WES) suffered a profit setback in FY19. Even the best retailers like JB Hi-Fi Limited (ASX: JBH) are reporting slowing sales growth.

However, some retailers look good value to the investment team at WAM Capital Limited (ASX: WAM) and WAM Microcap Limited (ASX: WMI).

City Chic Collective Ltd (ASX: CCX) has been a strong performer after it divested some loss-making businesses and is focusing on the growth area of plus-sized female clothes. It generates a large amount of revenue online and is growing in the large US market.

Myer Holdings Ltd (ASX: MYR) is currently going through a turnaround process with a focus on profitable sales and better quality service.

BWX Limited (ASX: BWX) is beginning to benefit from the new CEO's leadership and global expansion.

Motley Fool contributor Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Scentre 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.

More on Cheap Shares

Couple at an airport waiting for their flight.
Cheap Shares

Is Qantas a bargain ASX 200 stock today?

Analysts at Goldman Sachs think the Flying Kangaroo could be dirt cheap.

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Cheap Shares

1 secretly cheap ASX 200 stock I'm buying for the long run

The best performer on the index last year has had a poor start to 2024. Let's examine whether this is…

Read more »

A young woman sits on her bed holding a cup of coffee inside her recreational vehicle hired through the Camplify website
Cheap Shares

3 struggling ASX shares to buy at a discount

These stocks are down temporarily because of temporary issues. This could be a golden opportunity to buy cheap.

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Cheap Shares

2 'materially undervalued' ASX 200 shares to buy while they're at 'attractive value'

Is there a better feeling in investing than grabbing stocks for cheap then watching while everyone else catches on to…

Read more »

Five happy young friends on the coast, dabbing and raising their arms in the air.
Cheap Shares

5 oversold ASX shares to buy in March 2024

Will you get 'em while they're cheap?

Read more »

Rocket takes off from the hand of a businessman.
Cheap Shares

11% yield? 2 strikingly cheap ASX shares 'primed for recovery'

Discounted stocks are sometimes a value trap, but experts reckon this pair is ready to soar again.

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Cheap Shares

1 top ASX bargain stock that's ready for a bull run!

The market savaged these shares during reporting season, but multiple experts are bullish for the years to come.

Read more »

Three young women on holidays smile at they look at a map.
Cheap Shares

Long-term investing: 3 top ASX stocks you can buy for under $20 a share

These shares don't cost the earth to add to the portfolio, but all represent businesses going places.

Read more »