You don't need economic data to realise many Australians are doing it tough in 2023.
Just have a chat to any small business owner, or a mortgage holder.
However, there are some retailers that are set to do better than others, and this is how Glenmore portfolio manager Robert Gregory is finding some gems.
Perhaps with the view that the situation will only get better as interest rates stabilise, here are three consumer shares that he's bullish on:
'Impressive result' with increasing margins
Notwithstanding the macroeconomic pressures, furniture merchant Nick Scali Limited (ASX: NCK) saw its shares rise 16.9% last month.
Gregory noted the company's financial results were "strong".
"Net profit after tax (NPAT) of $101.5 million [was] up +26% vs pcp and ~5% ahead of market expectations," he said in a memo to clients.
"Despite the well documented headwinds for consumer spending, NCK produced an impressive result, with gross margin increasing by 250 basis points to 63.5%."
Looking into the future, growth is definitely on Nick Scali's agenda.
"Nick Scali currently has 64 Nick Scali and 43 Plush stores, with long term targets of at least 86 Nick Scali and 90 to 100 Plush stores."
Excitement at fever pitch for this retail giant
Premier Investments Limited (ASX: PMV) shares also went gangbusters in August, soaring 16.1%.
The big news for the retail conglomerate was that it would conduct a study into whether its Peter Alexander, Smiggle, and apparel brands would be spun off into separate entities.
"The announcement created excitement amongst investors given that a breakup of the various Premier Investments businesses in some way may lead to a higher market rating than is currently being attributed to the group as a conglomerate."
Gregory felt like the short-term hype was perhaps overdone, as the complexities of such a break-up would mean "any final decision is likely to take some time".
More information is expected at the end of the month when the company formally reports its annual result.
US expansion could put a rocket under these shares
In contrast to the other two shares, Retail Food Group Ltd (ASX: RFG) dipped 7.4% in a miserable August.
Gregory felt its 2023 financial results were "broadly in line with expectations".
"Underlying EBITDA was $26 million, which was at the bottom end of recently revised guidance of $26 to $29 million.
"Divisionally, domestic coffee and Café/Bakery produced strong results, whilst QSR and international franchising produced softer results."
The trading so far this financial year has been "solid" with revenue higher on a same-store basis.
Its expansion plans are what's making Greogry bullish on the owner of ubiquitous food brands such as Michel's Patisserie, Gloria Jeans, Crust Pizza, and Donut King.
"RFG is expanding its US business, where it plans to move from 47 to ~100 stores (over 3 years) via large scale multi-site operators, which should assist earnings growth, albeit FY24 will see upfront costs."