Which ASX retail shares are overcoming the slowdown in FY25?
The ASX retail share space is an intriguing sector right now, considering the challenging economic situation for some households and businesses.
The high cost of living and elevated inflation may have cut into households' discretionary spending capabilities. Despite that, some ASX retail shares have seen sales increase in the first few weeks of FY25.
That doesn't necessarily mean these businesses will see sales growth for the rest of the year, but it's a promising start for FY25 and could be a useful indicator in the lead-up to the important retail sales events in November and Christmas.
Let's look at what some companies reported as FY25 trading updates.
FY25 sales progress
Homewares and furniture online retailer Temple & Webster Group Ltd (ASX: TPW) reported revenue of 26% from 1 July to 11 August 2024.
Premium youth apparel retailer Universal Store Holdings Ltd (ASX: UNI) reported that its Universal Store business saw sales growth of 15.3% in the first seven weeks of FY25, with Perfect Stranger sales growth of 89.9%.
In the first eight weeks of FY25, home fragrance retailer Dusk Group Ltd (ASX: DSK) disclosed total sales growth of 16% year over year (from a low base).
Auto parts retailer and mechanic business Bapcor Ltd (ASX: BAP) revealed that sales had increased 7.7% in the first five weeks of FY25.
Online beauty product retailer Adore Beauty Group Ltd (ASX: ABY) reported that its revenue increased 7% year over year in the first seven weeks of FY25.
The electronics ASX retail share JB Hi-Fi Ltd (ASX: JBH) revealed that its JB Hi-Fi Australia division achieved total sales growth of 5.6% year over year.
Of course, not every business is growing. There are a few ASX shares that reported sales declines at the start of FY25.
Furniture retailer Nick Scali Limited (ASX: NCK) revealed that its written sales orders were down 1.2% year over year in June and July.
Domino's Pizza Enterprises Ltd (ASX: DMP) reported that its same-store sales were down 1.3% in the first few weeks of FY25.
Expert commentary on the ASX retail share sector
Writing on LinkedIn, MST Marquee senior analyst of the consumer sector Craig Woolford said retailers generally had an "upbeat tone" about the outlook, though not all businesses were seeing an acceleration of sales growth.
Woolford said:
Those with businesses in New Zealand and in liquor have generally seen more sluggish trends. Quick service restaurants are also slowing too. The tilt towards better sales trends is a sign of things to come for Australian retail.
However, it won't be evenly distributed as we return to more normal conditions where great product, price and service differentiate the best performers.
In my opinion, investors may be able to find some opportunities in the ASX retail space, but volatility in valuations and sales performance could continue.
The post Which ASX retail shares are overcoming the slowdown in FY25? appeared first on The Motley Fool Australia.
Motley Fool contributor Tristan Harrison has positions in Temple & Webster Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Domino's Pizza Enterprises and Temple & Webster Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group. The Motley Fool Australia has recommended Adore Beauty Group, Domino's Pizza Enterprises, Jb Hi-Fi, Nick Scali, and Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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