Time to shop for retail stocks?

The latest data from the ABS is a positive for retail stocks.

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

Australian Bureau of Statistics (ABS) data out today shows a pleasing improvement in seasonally adjusted retail trade for August of 0.4%. This increase follows a rise of 0.1% in July and sets the growth in Australian retail turnover for the year to August 2013 at 2.3% seasonally adjusted.

Importantly for retailers including David Jones (ASX: DJS) and Myer (ASX: MYR), the largest contributor to the increase was department stores, which saw a 6.4% rise in trade for the month.

The data also showed positive trends for clothing, footwear and personal accessory retailing with a rise of 0.3%. This result bodes well for a number of listed stocks including Kathmandu (ASX: KMD) and the owner of brands Smiggle and Just Jeans, Premier Investments (ASX: PMV) which both recently reported upbeat results.

The data wasn't so good for retailers such as Harvey Norman (ASX: HVN) and Fantastic Holdings (ASX: FAN). These companies are are exposed to the household goods retailing sector which recorded a 0.6% fall in trade. However given their exposure to the housing sector, which appears to be in the early stages of a recovery, they could be expected to enjoy a boost in coming quarters.

As recent results from retailers including Kathmandu and JB Hi-Fi (ASX: JBH) have shown, some retailers have adjusted much better than others to the tough retail trading environment. With a strong rally in the share price of many retailers, investors need to be careful in evaluating just how much expectation for higher earnings is already priced into retail stocks.

Foolish takeaway

Heading into the critical Christmas period, which is when many discretionary retailers make most of their money, an uptick in retail trade is certainly a positive. If companies can report positive comparative store sales growth in the upcoming quarters it could certain bode well for a corresponding uptick in share prices.

Interested in our #1 dividend-paying stock? Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

More reading


Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »