The retail industry certainly has been a difficult place to both operate and invest in this year.
Weak trading conditions and the impending launch of e-commerce behemoth Amazon in Australia have weighed heavily on the industry.
Three retail shares which have fallen hard are listed below. Are they in the bargain bin now?
The Bapcor Ltd (ASX: BAP) share price has tumbled around 9% this year. I think this decline means the automotive aftermarket parts retailer's shares are trading at an attractive level. After all, I feel 24x annualised earnings is more than fair for a company which delivered half-year pro forma net profit after tax growth of 44%. And thanks to its market-leading position, store network expansion, and the Hellaby's acquisition, I still believe there is plenty of growth left in its tank.
The Baby Bunting Group Ltd (ASX: BBN) share price is down almost 20% since the turn of the year despite posting a 22% increase in half-year profit in February. The prospect of Amazon stealing market share from the baby products retailer appears to be the catalyst for the sell-off. Whilst I do see Amazon as a threat, I feel the sell-off has been an overreaction. At the current share price I think Baby Bunting could be a good option for investors, especially with its long runway for growth. At present the company has 40 stores in operation, but plans to double this to 80 stores in the future.
The JB Hi-Fi Limited (ASX: JBH) share price has fallen over 15% so far this year. But unlike Bapcor and Baby Bunting, I wouldn't be in a rush to snap up shares in this retailer. Of all the areas of the retail industry that I expect to be impacted by an Amazon launch, electronics would have to be up there as one of the worst hit. Judging by U.S. and U.K. equivalents, JB Hi-Fi is likely to face an uphill struggle to compete with the e-commerce giant. Because of this I would suggest investors give its shares a wide berth.
