Due to competitive pressures and weak consumer sentiment, many investors have been avoiding retail shares over the past 12 months.
While I do think a bit of caution is necessary, I wouldn't suggest investors avoid the sector entirely.
In fact, I think there are many retail shares that could be great investments today. Three that I like are listed below:
Baby Bunting Group Ltd (ASX: BBN)
Baby Bunting has become a victim of its own success over the last 12 months. Its success and continued expansion has led to many of its competitors going out of business. While this is of course a positive in the medium to long term, in the short term it means clearance sales from closing competitors. I think the selloff that has occurred has presented patient investors with a buying opportunity to pick up the shares or a quality retailer at a very attractive price.
Lovisa Holdings Ltd (ASX: LOV)
This fashion jewellery retailer has been my favourite retail share on the Australian market for some time now. Pleasingly, despite its shares rocketing higher over the last 12 months, I don't think it is too late to invest. Especially if its expansion in the United States is a success. Due to the size of that market, I see no reason why Lovisa could not one day have many times more stores in the United States as it does in Australia. At the last count Lovisa had 152 stores, or 47.5% of its network, operating in Australia.
Super Retail Group Ltd (ASX: SUL)
I think that this retail conglomerate could be a good option for investors. Although I have been concerned by the soft performance of its Leisure segment, management appears confident that the acquisition of the strong performing Macpac brand will help turn around the segment's performance and complement the rest of its growing business. With its shares trading at around 12x trailing earnings, I think the risk/reward on offer here is compelling.
