ASX retail shares are having a tough time in the face of high inflation and rising interest rates.
Experts say it takes 12 months for the first rate rise to filter through to people's spending decisions.
It's been 15 months since that first rate rise in May 2022, and new data from the Australian Bureau of Statistics today reveals a third consecutive month of reduced discretionary spending in June.
Despite this, three ASX retail shares have just been upgraded by top broker CLSA today.
Which ASX retail shares are set to rise?
As reported in The Australian, these retail stocks are attracting CLSA's attention on Tuesday.
Let's check them out.
The ASX retail share with 15% upside
Premier Investments Limited (ASX: PMV) is our first upgraded ASX retail share today.
Premier is the name behind popular brands Smiggle, Dotti, Just Jeans, Portmans, and Peter Alexander.
The Premier Investments share price is down 3% today to $21.64.
There is no price-sensitive news from Premier Investments today.
CLSA has upped its rating on Premier Investments to accumulate with a 12-month share price target of $25. This implies a potential 15.5% upside on today's share price.
The ASX retailer share is down 12.9% in the year to date.
Myer shares upgraded despite disappointing update
CLSA is also optimistic on Myer Holdings Ltd (ASX: MYR) shares, which are down 12.7% to 62 cents today.
The fall comes after the department store chain released a trading update.
The update revealed a sharp slowdown in sales and significantly weaker margins in 2H FY23.
My colleague James points out that the update indicates 94% of Myer's full-year profits were generated in 1H FY23. This may not bode well for the ASX retail share in FY24.
But CLSA reckons it's a good time to buy Myer shares.
The broker has raised its rating to accumulate with a price target of 76 cents. This implies a potential 22.5% upside on today's Myer share price.
The Myer share price is down 10.45% in the year to date.
JB Hi-Fi share price to rise 8% in 12 months
CLSA also likes JB Hi-Fi Limited (ASX: JBH) shares, which are up 0.11% to $46.19 in late trading.
The company has no news for ASX investors today.
CLSA has raised its rating on JB Hi-Fi shares to accumulate with a price target of $50. This implies a potential 8.3% upside on today's share price.
The JB Hi-Fi share price is up 9.7% in the year to date.
The popular ASX retail share is among the top 10 most shorted stocks on the market today.
Foolish takeaway
Emanuel Datt from Datt Capital raises an interesting point.
Datt reckons Premier Investments and Myer are among the ASX retail shares that will benefit most from turbocharged immigration.
The Federal Budget forecasts a net increase of 715,000 migrants over the next two financial years.
Will that be enough to offset the trend of reducing discretionary spending?
Meantime, my colleague Tristan ponders whether investors should be avoiding ASX retail shares today.
