There are some cheap ASX retail shares that have been impacted by the high cost of living hurting consumers. But I believe some of them may be opportunities because of how they have fallen and the attractive current price-earnings (P/E) ratios.
Retailers do not have the same level of consistent demand as other sectors like telecommunications and utilities, so it's normal for net profit to rise and fall.
Investors usually value a business based on how much profit it is expected to make, so it's understandable that the share prices of retailers go through volatility. I believe those beaten-up ASX retailers can be a bargain if they're at a low point in the cycle. I'll talk about two sold-off retailers that I think could bounce back.
A key reason for that belief is that the more the RBA cuts the cash rate, the more money that households have in their budget, which could boost spending in various categories.
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Adairs Ltd (ASX: ADH)
This company has three different operating businesses that sell furniture and homewares: Adairs, Focus on Furniture, and Mocka.
The Adairs share price has declined by 22% in 2025 to date, and it's down close to 50% since the end of 2021.
Adairs recently gave a FY25 trading update which noted elevated promotional activity to drive sales and manage inventory, which has impacted margins. That's why FY25 group sales are guided to grow 6.1% but underlying group operating profit (EBIT) is guided to increase 1.2% for the financial year.
However, I'm confident on both sales and margins improving in FY26 and beyond. Firstly, the RBA rate cuts could boost consumer spending which could boost the cheap ASX share.
Second, the company's impressive national distribution centre is seeing service and cost metrics continue to improve, and I think this will assist the business further in FY26. I'm also excited by the plan for Mocka to be sold in physical stores.
Third, it's not the entire business that is hurting. Both Adairs and Mocka saw pleasing profitability trends – it's Focus on Furniture that's expecting a 36% drop in underlying EBIT. But if that trend continues, the struggling part of the business will have a smaller impact on the FY26 result than FY25.
In FY25, the company is expecting to report sales growth of 9.2% and 14.1% for Adairs and Mocka, respectively. Underlying EBIT is expected to increase by 21% and 18.5%, respectively, for Adairs and Mocka.
According to the forecast on Commsec, the Adairs share price is valued at 9x FY26's estimated earnings.
Accent Group Ltd (ASX: AX1)
Accent is an important footwear retailer in the local market because of its own businesses and the global brands with which it has agreements to distribute.
Some of those global brands include Vans, Skechers, Hoka, Herschel, Sebago, Merrell, Ugg, Timberland, and Saucony. Its own businesses include Platypus, The Athlete's Foot, Hype, Stylerunner, Nude Lucy, and Article One.
As the chart below shows, the Accent share price has dropped over 37% since the start of 2025.
I think this is a good time to invest in the cheap ASX share after it has had to navigate similar issues as Adairs – a weaker sales environment has led to weaker margins.
The business could grow profit thanks to a few different ways.
First, there's the store rollout of various brands. This could deliver higher sales, and the business could benefit from scale advantages.
Second, it's going to open dozens of Sports Direct stores across Australia and New Zealand in the coming years. This agreement with Sports Direct owner Frasers will also allow Accent to sell Frasers brands through Sports Direct stores and other Accent businesses. Those brands include Everlast, Lonsdale, Slazenger, Karrimor, USA Pro, and Hot Tuna.
Third, there are the RBA rate cuts, which could help increase consumer demand.
Finally, Accent could continue expanding its portfolio of brands. In FY26, it will work with Dickies and Lacoste.
According to Commsec estimates, the Accent share price is trading at just under 10x FY26's estimated earnings.
