Top 3 of FY24: The ASX retail shares defying the cost-of-living crisis

High inflation and interest rates failed to prevent these retail stocks from soaring in FY24.

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A cost-of-living crisis doesn't bode well for ASX retail shares. But this trio overcame the odds to rack up impressive share price gains amid difficult trading conditions in FY24.

Best 3 ASX retail shares of FY24

Here are the best retail stocks of the ASX 200 for FY24, according to data from S & P Global Market Intelligence.

Lovisa Holdings Ltd (ASX: LOV)

Budget jewellery retailer Lovisa led the consumer discretionary stocks in FY24 with a 70.3% share price gain. A positive trading update in late November gave the stock new momentum.

Speculation of interest rate cuts in 2024 also helped, creating an early Santa Rally for the entire ASX 200. The retail share also got a bump in February after the company released strong half-yearly results. Lovisa shares have been largely rangebound since March, trading between about $30 and $34 per share.

The Lovisa share price closed the session on Friday at $31.28, up 0.94%.

Premier Investments Limited (ASX: PMV)

The second top-performing ASX 200 retail share in terms of share price growth was Premier Investments, up 53.8% over the 12 months.

Legendary rag trader Solomon Lew heads up this company, which owns popular brands such as Just Jeans, Jacqui E, Smiggle, Dotti, and Peter Alexander.

Premier is also a major shareholder of Myer Holdings Ltd (ASX: MYR). In the last week of FY24, Myer proposed that the department store acquire Premier's Apparel Brands business in exchange for new Myer shares.

The Premier Investments share price closed on Friday at $29.64, up 0.20%.

JB Hi-Fi Ltd (ASX: JBH)

Back in November 2022, the Motley Fool's chief investment officer, Scott Phillips, told us JB Hi-Fi shares were great value at just under $43 with a price-to-earnings (P/E) ratio of 9x.

On Friday, the JB Hi-Fi share price closed at $62.33. The stock now has a P/E of 14.87x, according to the ASX website. The retailer was also the third best-performing stock of the retail sector in FY24, with a 39.9% share price gain.

What's happening with retail sales?

The Australian Bureau of Statistics (ABS) released new retail trade figures last Wednesday.

Retail trade turnover increased by 0.6% (seasonally adjusted) in May, a big improvement on the 0.1% gain in April and the 0.4% fall in March.

The gain was driven by consumers taking advantage of early end-of-financial-year promotions and mid-year sales, according to ABS head of business statistics, Robert Ewing.

Ewing commented:

Many retailers started end-of-financial-year sales early, offering larger discounts than usual and noted that shoppers remain price-sensitive in response to persistent cost-of-living pressures.

Retail businesses continue to rely on discounting and sales events to stimulate discretionary spending, following restrained spending in recent months.

While the May bump was positive for retailers, consumer spending is still generally weak. It's up only 1.5% in annual trend terms despite 2.5% population growth over the 12 months ending 31 December 2023.

Looking ahead, Deloitte Access Economics partner David Rumbens said stage three tax cuts and eventual interest rate cuts would help the retail sector.

In Deloitte's latest retail forecast report, the consultancy predicts no growth at all in retail spending for the calendar year 2024 but a 2.5% uplift in 2025.

Motley Fool contributor Bronwyn Allen 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 Lovisa. The Motley Fool Australia has recommended Jb Hi-Fi, Lovisa, and Premier Investments. 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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