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Coronavirus: What does lockdown mean for ASX retail shares like JB Hi-Fi?

Coronavirus restrictions are tightening and, as a result, I’m watching ASX retail shares.

I think non-discretionary retailers like Coles Group Ltd (ASX: COL) could benefit from tightening restrictions across the company.

However, there are some question marks around those with discretionary products.

Here’s what I think might lay ahead for ASX retail shares in the coming months.

Which ASX retail shares to watch this month

Clearly, the August earnings season will be a big factor for ASX retail share prices.

It’s been a strong year so far for the likes of JB Hi-Fi Limited (ASX: JBH). The JB Hi-Fi share price is up 15.5% in 2020 while the S&P/ASX 200 Index (ASX: XJO) has fallen 9.8% lower.

Given its heavy reliance on electronics, I think JB Hi-Fi is one of those non-discretionary shares to watch.

The retailer is set to release its FY20 results on 17 August. I think the numbers will be strong, but investors may be worried about the impact of restrictions weighing down sales.

I can see a couple of headwinds for the ASX retail share in 2020. One is that government stimulus money is starting to slow which could impact discretionary spending.

The other is that many Aussies already loaded up on their electronics in March. That means recurring customer revenue may be lower in the year ahead.

It’s not just JB Hi-Fi I’m watching this month. An article in Monday’s Australian Financial Review (AFR) also got me thinking about other ASX retail shares.

Many stores owned by JB Hi-Fi, Super Retail Group Ltd (ASX: SUL) and Wesfarmers Ltd (ASX: WES) all stayed open during the first lockdown in March.

However, that’s set to change which could mean a different impact this time around. A strong online presence may help some stores weather the impact but nothing is certain.

If Aussies are willing to bunker down, some of these top ASX retail shares could see an earnings slump. That won’t, however, be reflected in their FY20 results, which means we will have to wait for more trading updates.

Foolish takeaway

There’s no doubt that the coming weeks will be challenging for Victorian and Australian businesses.

I think the safe play here is to stick to non-discretionary ASX retail shares. Supermarket sales should be more resilient than most in the coming months.

That means a supermarket retailer like Coles or Metcash Limited (ASX: MTS) may be worth a look.

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 owns shares of COLESGROUP DEF SET and 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.

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