The retail sector is certainly not the easiest place to invest, but I believe it is well worth having a little exposure to it in your portfolio.
The big question, though, is which retail shares should you buy. Are these three retailers in the buy zone?
Accent Group Ltd (ASX: AX1)
I think this footwear retailer could be worth considering after its strong performance in FY 2018 and positive start to the current financial year. Accent delivered a 17.9% increase in net profit after tax to $47.1 million thanks to a combination of strong online sales growth and a significant improvement in its gross profit margin. The latter was achieved through vertical brand sales and reduced discounting. It has been a case of so far so good in FY 2019 with the company tracking ahead of its like for like sales growth targets. I believe this is pointing to another solid profit result this year.
Kogan.com Ltd (ASX: KGN)
This ecommerce company's shares have fallen significantly over the last few months, bringing them down to a very attractive level in my opinion. This decline has been driven largely by heavy insider selling and the lack of guidance or a trading update with its full year results last month. While I do have concerns with the lack of a trading update, I think its shares have pulled back and de-risked things significantly. Because of this, I feel now could be a great time to consider picking up shares.
Myer Holdings Ltd (ASX: MYR)
Earlier this month this department store operator released its full year results and revealed a reported loss after tax of $485.8 million. While this massive loss was attributable to implementation costs and individually significant items, its normalised result wasn't much better. Profits pre-implementation costs fell 52.2% to $32.5 million. I'm not expecting much improvement in FY 2019 so I plan to stay away. However, recent news that WAM Capital Limited (ASX: WAM) has built up a substantial stake in the embattled retailer has piqued my interest. WAM does have a strong track record of investing successfully in beaten down retail shares.
