Two ASX 300 retail shares are a buy but another may fall slightly, according to analysts at Macquarie.
The broker rates Lovisa Holdings Ltd (ASX: LOV) and Premier Investments Ltd (ASX: PMV) as buys, while City Chic Collective Ltd (ASX: CCX) is rated neutral.
Let's take a look at the outlook for these three ASX retail shares.
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Will retail shares bounce back?
Macquarie analysts have placed an outperform rating on the Lovisa share price with a $27 price target. It also rates Premier Investments as outperform with a $29 price target. Premier Investments has a portfolio of retail brands including Portmans, Just Jeans, and Peter Alexander.
The Macquarie team likes retailers with scale, strong balance sheets, and market-leading brands, with youth consumers well positioned in today's economic environment, the Australian Financial Review reported.
Lovisa shares fell 0.29% on Tuesday to close at $24.21 each. Macquarie's price target of $27 implies an upside of 11.5%. In November, Lovisa reported global store sales in the first 19 weeks of FY23 to date were up 16.1% on FY22. The company also reported it had opened 47 new stores.
Premier Investments shares dropped 5.19% on Tuesday to close at $24.85. Macquarie's price target of $29 implies a 16.7% upside based on the current share price.
In early December, the company reported global sales in the first 17 weeks of 1H23 had soared 24.9% compared to pre-Covid 1H20 sales. The company also reported record sales during the Black Friday trading week.
However, looking at the bigger picture for retail, analysts at Macquarie are concerned about online sales traffic in the current economic environment, commenting (courtesy of AFR):
December website traffic data remains weak as retailers continue to cycle tough COVID comps. Online activity continues to moderate from elevated levels seen over CY20-21.
With this in mind, Macquarie has placed a neutral rating on City Chic Collective with a 42-cent price target, noting the company's website traffic fell 8.9% in the "first weeks of December", the publication reported.
City Chic shares fell 3.37% in Tuesday's trade to close at 43 cents apiece. On 20 December, City Chic reported global year-to-date revenue was down about 7% compared to the prior corresponding period. However, it was up 38% on FY21.
Meanwhile, the latest ANZ-Roy Morgan Consumer Confidence data, released today, shows consumer confidence lifted 4.9 points last week to 87.4. ANZ senior economist Adelaide Timbrell said:
This was the first new year's jump in confidence since 2018.
Share price snapshot
The Lovisa share price has soared nearly 32% in the last year.
Premier Investments shares have declined 11% in the past 52 weeks.
Citi Chic Collective shares have plunged 91% in the past year.
