With ASX earnings season fast approaching, Australian investors may be looking for undervalued companies to buy ahead of their earnings results. While ASX retailers have battled tough macroeconomic conditions over the past couple of years, experts say several remain attractive.
Investors with minimum or no exposure to the retail sector could benefit from adding ASX retailers to their portfolio. This would improve diversification and ultimately mitigate risk.
If you're looking to buy ASX retailers, look no further.
Here are 3 to consider, based on Macquarie's SMID-Cap Best Picks July 2025 report. 2 are considered mid-cap stocks, and 1 is considered a small-cap stock (with a market capitalisation of less than $1 billion).
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Lovisa Holdings Ltd (ASX: LOV)
Lovisa is a fast fashion jewellery retailer that has been rolling out stores around the world at a rapid rate. In May, it reached the milestone of opening its 1,000th store.
With a market capitalisation of around $3.7 billion, Lovisa is a mid-cap stock.
Broker Macquarie expects significant growth over the coming years, supported by store roll-out and EBIT margin expansion.
The ASX 200 retailer's share price took a hit in April when US President Trump unveiled his tariffs. Given that its products are manufactured in China (with around 25% of sales made in the US), investors were understandably concerned about profitability. However, Macquarie expects Lovisa to be able to largely offset any impact from US tariffs with minor price increases.
Since April 7, Lovisa shares have rebounded more than 60%.
Macquarie currently has an outperform rating and price target of $33.40 on Lovisa shares.
Lovisa also offers a dividend yield of 2.13%.
Harvey Norman Holdings Ltd (ASX: HVN)
Harvey Norman is an Australian retailer of furniture, bedding, and technology products.
With a market capitalisation of around $7 billion, Harvey Norman is also a mid-cap stock.
Over the past 5 years, its share price has risen 58%. Macquarie suggested Harvey Norman has benefited from a shift in consumer behaviour over this period (since COVID), with consumers increasingly seeing technology as a household necessity. Additionally, the broker said the replacement cycle of technology is generally 5-7 years. With many consumers upgrading during COVID, Harvey Norman should see increased demand in the next couple of years.
The broker also said further interest rate cuts would boost consumer spending, and therefore be a tailwind for the business.
Macquarie currently has an outperform rating and price target of $5.50 on Harvey Norman shares.
Harvey Norman also offers an attractive dividend yield of 4.25%, which should appeal to passive income-oriented investors.
Universal Store Holdings Ltd (ASX: UNI)
Universal Store is the youth fashion retailer behind Universal Store (US), Perfect Strangers (PS), and Thrills (T).
With a market capitalisation of less than $1 billion, Universal Store is a small-cap stock.
Universal Store shares are up more than 40% in the past year, attracting greater investor and broker attention.
Macquarie believes the company has a significant store roll-out runway, with management reiterating its target of more than 100 US stores and more than 60 PS stores. In 1H25, the company opened 7 new stores, and confirmed 5 openings for 2H25 (3 PS, 1 US, and 1 T). The broker believes Universal Store shares will continue to win market share, driven by both ongoing store roll-out and higher like-for-like sales.
Macquarie has placed an outperform rating on Universal Store with a price target of $9.80.
Universal Store also offers an attractive dividend yield of 5.42%
The small-cap company is also favoured by Bell Potter. As reported by The Motley Fool's James Mickleboro, the broker recently rated it a buy, citing its strong growth runway and attractive valuation.
