The August earnings season is upon us and I’ve got my eye on ASX retail shares.
Why am I watching ASX retail shares?
Let’s rewind to January 2020. Aussie retailers were under pressure and we saw big names like Jeanswest fall into voluntary administration.
The February earnings season saw a mixed bag of results before the coronavirus pandemic sent ASX retail shares plummeting.
That investor fear was not unfounded. Higher unemployment normally translates to lower discretionary income and fewer retail sales.
However, government stimulus and strong central bank support helped prop up the economy. In fact, the pandemic restrictions boosted sales for a number of ASX retail shares.
All of that is in the rear-vision mirror now. I’m looking ahead to the August earnings season and which ASX retail shares are in the buy zone.
Why Super Retail and 2 others are worth watching
The Super Retail Group Ltd (ASX SUL) share price shot 9.5% higher last Friday after a strong earnings guidance update.
The company’s unaudited full-year results show a 4.2% increase in total sales for FY20. That includes positive contributions from Supercheap Auto, Rebel and BCF, while Macpac sales fell 5.0%.
That saw investors pile into the ASX retail share on Friday. In fact, Super Retail shares are now up more than 150% since the March bear market.
There are still some concerns about the impact of Victoria’s stage 4 restrictions and those across the other states on non-discretionary retailers. I’ll be watching the group’s August 24 full-year results announcement for any further guidance.
I think Harvey Norman Holdings Limited (ASX: HVN) is another one to watch in August.
Harvey Norman could see some solid sales numbers thanks to strong electronics sales. The Aussie retailer already announced a special dividend thanks to stronger than expected sales.
The Harvey Norman share price is down 9.6% for the year but trading 1.52% higher in today’s session.
I’m not sure when Harvey Norman will announce this year’s annual results, but its FY19 report was released on 27 September last year, which is later than most.
It’s not just the retailers I’m watching. I think Aussie real estate investment trusts (REITs) with strong retail exposure are worth keeping an eye on too.
Scentre Group (ASX: SCG) is also on my watchlist for August. Scentre owns and operates the Westfield shopping centres across Australia and New Zealand.
I think the ASX retail REIT share is one to watch, but I wouldn’t hold my breath for a strong result.
Shopping centre traffic numbers are down, which isn’t good news for the REITs or their tenants. However, Scentre shares are down 47.0% this year, so it looks like a disappointing result is already being priced in.
Scentre is set to release its half-year earnings result on 25 August and I’m sure it’ll be one worth watching.
There are a number of ASX retail shares that have struggled to climb higher this year.
Despite some solid gains since March, I think we could see Super Retail and other shares continue to climb on the back of strong August earnings.
These 3 stocks could be the next big movers in 2020
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group 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.
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