ASX retail shares mixed amid modest April sales growth

What does the latest sales data mean for ASX retail shares?

| More on:
A woman sits on sofa pondering a question.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX retail shares are mixed today after the release of the latest retail sales data from the Australian Bureau of Statistics (ABS). Shortly before market close, the ASX consumer discretionary sector is the third-worst performing of the day, with heavyweights like Wesfarmers Limited (ASX: WES) and JB Hi-Fi Limited (ASX: JBH) lagging the S&P/ASX 200 Index (ASX: XJO).

Elsewhere in the sector, though, Harvey Norman Holdings Limited (ASX: HVN) is trading flat and Temple & Webster Group Ltd (ASX: TPW) is surging almost 3% on the back of share buyback news.

The April numbers revealed a small increase in retail sales for April 2024. Seasonally adjusted, retail trade rose by 0.1% month-on-month and 1.3% compared to April 2023. 

The combination of inflation and high interest rates is squeezing retail spending. Clothing, footwear, and personal accessory retailing saw a decline of 0.7% in April, and food retailing was down 0.5%. Sales of household goods, however, showed a positive trend rising by 0.7%. Department stores also experienced a modest increase of 0.1%, maintaining their positive trajectory over recent months. 

Analysts have predicted sales will remain flat throughout 2024 due to rising living costs, high household debt, and economic uncertainty. This could dampen profit expectations for ASX 200 retail shares. JB Hi-Fi advised earlier this month that sales remained resilient, but cautioned that the retail market was "challenging and competitive". Other major retailers like Wesfarmers, which owns Kmart and Target, could also be impacted by the insipid outlook.

Online sales accelerate

Overall retail sales may be down, but the portion of sales taking place online is accelerating. Data from the latest NAB Online Retail Sales Index reveals Australians spent $57.14 billion on online retail in the 12 months to April, making up about 13.4% of the total retail trade. The performance of online retail has consistently outpaced broader retail, leading to an increase in the online share of total retail sales.

Retailers with a strong online presence and diversified product offerings have seen substantial benefits from the ongoing shift towards online shopping. Companies like JB Hi-Fi and Temple & Webster have invested heavily in their e-commerce infrastructure and have seen significant share price gains over the past few years.

The accelerated shift to online could arguably further strengthen the market position of companies that have invested in their e-commerce infrastructure and allow them to stay ahead of competitors with less developed online capabilities.

Foolish takeaway

Despite mixed trading in ASX retail shares following modest retail sales growth in April, the accelerating shift to online shopping could present a silver lining. Retailers with strong e-commerce platforms may be well-positioned to navigate the challenging economic landscape and capitalise on the growing online retail market.

Motley Fool contributor Katherine O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Temple & Webster Group, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Harvey Norman, and Wesfarmers. The Motley Fool Australia has recommended Jb Hi-Fi and Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Retail Shares

A woman and two children leap up and over a sofa.
Retail Shares

3 ASX retail shares that could benefit from potential interest rate cuts

Would you buy more shoes, sports gear, or furniture if interest rates fall?

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Retail Shares

Why this top fund manager has been snapping up Lovisa shares

This leading fund manager believes the sell-off in Lovisa shares was an overreaction.

Read more »

Puk Pukster the Pug is displaying her new piece of jewellery with a sad face.
Share Fallers

This ASX 200 superstar is down 13% in 2 days. Time to pounce?

ASX 200 investors have sent this market darling spiralling lower. Is it a bargain or a falling knife?

Read more »

Two couples race each other in supermarket trollies, having a great time, smiling and laughing.
Retail Shares

Would I be crazy to buy Coles shares at $16?

The Coles share price has outperformed rival Woolworths over the past year.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Retail Shares

3 reasons this broker thinks Woolworths shares are a cheap buy

Is this supermarket giant being undervalued by the market?

Read more »

Man on a laptop thinking.
Broker Notes

Why did Goldman Sachs just downgrade Wesfarmers shares?

The ASX 200 conglomerate has had a ripper run of share price growth. So why is Goldman Sachs downgrading it?

Read more »

Woman checking out new iPads.
Retail Shares

Dump 'em! Top broker says sell these 3 ASX retail shares

This comes amid high interest rates, weak retail sales, and persistently negative consumer sentiment.

Read more »

A woman looks at a tablet device while in the aisles of a hardware style store amid stacked boxes on shelves representing Bunnings and the Wesfarmers share price
Retail Shares

What is the price target for Wesfarmers shares?

Is there further success coming for this retail giant?

Read more »