5 fashion retail stocks to watch amid increasing consumer discretionary spending

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5 fashion retail stocks to watch amid increasing consumer discretionary spending

Discretionary spending, Retail Stocks
Image source: Copyright © 2021 Kalkine Media

Highlights

  • The data released by the Australian Bureau of Statistics has indicated month-on-month growth of 4.9% in retail sales in October 2021. 
  • Consumers’ discretionary spending in clothing, footwear, and personal accessory retailing rose by 27.7% in October 2021, on a seasonally adjusted basis. 
  • Retail space players are witnessing positive market momentum amidst the upcoming shopping period. 

Australian retail sales exceeding market expectations jumped 4.9% in October 2021, on a seasonally adjusted basis, indicating that the economy is on track to recovery. The data released by the Australian Bureau of Statistics (ABS) also highlighted that retail sales rose 5.2% compared with October 2020. 

READ MORE: Black Friday is here! Retail sales jump in October

The recent figures, following September’s 1.3% rise, were primarily driven by the lifting of stay-at-home restrictions in New South Wales, Victoria, and the Australian Capital Territory.

The uptick in retail sales was led by spending in clothing, footwear, and personal accessory retailing, which rose 27.7% month-on-month. At the same time, consumers also engaged in discretionary spending across other categories. 

With Black Friday and Cyber Monday deals lighting up the stores and people gearing up for Christmas shopping, retail owners are witnessing upbeat market momentum.  

ALSO READ: CBA expects bumper Black Friday shopping; 5 ASX retail shares to look at

Let us look at five stocks across clothing, footwear, and personal accessory retailing that remained on investors’ radar. 

City Chic Collective Limited (ASX: CCX)

The global omni-channel retailer which specialises in apparel, footwear and accessories for plus-size women saw revenue of AU$258.5 million in FY21, which represented 32.9% top-line growth and 31.6% comparable growth.

Meanwhile, the Company’ statutory NPAT edged up over 135% to AU$21.6 million.

The strong growth was driven by CCX’s focus on plus size, digital and global customer acquisitions. It also soft-launched the conservative value product into the Australian market, allowing the Company to address the broader curvy community. 

ALSO READ: Best performing ASX retail stocks of last month

Accent Group Limited (ASX: AX1)

Accent Group delivered a record profit in FY21, with EBITDA up by 19.3% to AU$242 million while profit after tax increased by 38.6% to AU$76.9 million. The robust result was an outcome of the strong digital growth (48.5%) and the contribution from 90 new stores that opened during the year. The business continues to advance its vertical product program for driving growth. 

In a recent update, the Company indicated a significant impact of the state and territory-wide government-mandated store closures in New South Wales, Victoria, the Australian Capital Territory during the first 18 weeks ended 31 October 2021. However, sales results since the re-opening of NSW and Victoria have been strong. 

Retail Spending

Source: Copyright © 2021 Kalkine Media

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Lovisa Holdings Limited (ASX: LOV)

Australian accessories and jewellery retailer Lovisa Holdings saw its global store sales rise by 25.2% during the first 20 weeks of FY22 over the previous corresponding period.

Meanwhile, total sales for this period rose 46.1% in FY21 despite the stay-at-home restrictions in Australia, New Zealand, and Malaysia.

With the lockdown ending, LOV has re-opened all stores in its store network and recently included two new franchise stores in Cyprus. 

Kathmandu Holdings Limited (ASX: KMD)

COVID-19 lockdowns in Australasia impacted same-store sales (including online) for the 13 full weeks to 31 October 2021. The Company further reported strong growth of 33.8% in online sales, with Rip Curl and Kathmandu witnessing an increase of 11.2% and 58.4% in online sales. 

The Company indicated that Rip Curl and Kathmandu are poised well for the Black Friday and Christmas trading period, with sufficient inventory to meet the expected demand. 

ALSO READ: What can threaten Black Friday sales in Australia?

Universal Store Holdings Limited (ASX: UNI)

Speciality retailer of youth casual apparel, Universal Store recorded 14.1% lower sales for the first 20 weeks of FY22 compared to the same period in FY21. A

lthough YTD like-for-like sales growth up to 14 November 2021 was 8.4% lower, there was over a 16.2% increase compared to the corresponding FY20 period.

The Company’s online channel delivered around 68% sales growth over the YTD period on top of cycling growth of around 123.6% in pcp. The Company has undertaken a stream of measures to position the business for a successful Christmas trading period. 

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