The Motley Fool

Are ASX retail shares set for a Christmas bust?

There are signs that the ASX retail sector could be having a bit of a dull Christmas retail period after the exciting Black Friday and Cyber Monday sales almost a month ago.

According to reporting by the Australian Financial Review, retailers are cutting shifts for casual Christmas workers, “culling” staff and bringing forward Boxing Day discounts.

The cause of all this? Weaker sales than expected in December, probably because many people fulfilled their shopping needs after Black Friday and Cyber Monday.

Only a couple of weeks ago we learned that Harris Scarfe was going into receivership and planned to close 40% of its stores.

Department stores are retailers with some of the largest staff counts, though Myer Holdings Ltd (ASX: MYR) and Wesfarmers Ltd’s (ASX: WES) Target both denied they had reduced staff in the week before Christmas, although Target said that stores manage their own rosters.

I wonder how David Jones, Wesfarmers’ Kmart and Woolworths Group Ltd’s (ASX: WOW) Big W are going during the Christmas shopping period.   

Gary Mortimer, senior lecturer at QUT Business School, said that for some retailers the six weeks to Christmas accounted for 60% of annual profits for some retailers, so it’s very important to do well in this period.

You can imagine that Christmas is also an extremely important time for retailers like JB Hi-Fi Limited (ASX: JBH) with a focus on electronics.

As long as retailers still achieve overall growth between Black Friday and the Boxing Day sales, I don’t think it truly matters when the sales happen in that month or two period, as long as they aren’t too heavily discounted.

Foolish takeaway

Retail is a tough business, particularly when it comes to discretionary spending. If I had to buy a retailer I would rather invest in something like City Chic Collective Ltd (ASX: CCX) which is growing online and overseas.  

However, I think these top ASX shares are even better bets for growth.

Five Of The Best ASX Growth Shares Today

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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.

FREE REPORT: Five Cheap and Good Stocks to Buy now…

Our Motley Fool experts have FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!