Highlights
- Discretionary Surge ASX consumer discretionary index up 19.29% in FY24
- Domino’s Moves Domino’s improves strategy despite a 44.18% drop in share price
- JB Hi-Fi Worries JB Hi-Fi’s shares up 23.57% this year, but growth concerns persist
Despite prevailing high interest rates and inflationary pressures, ASX retail shares have shown notable resilience and growth. In FY24, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) experienced a significant increase of 19.29%, surpassing the broader S&P/ASX 200 Index (ASX: XJO), which rose by 7.83% or 12.1% including dividends. This strong performance of ASX retail shares has continued into the new financial year, with the consumer discretionary index rising by 5.48% since July 1, compared to a 2.08% increase in the ASX 200.
Strong Performers in the ASX Retail Sector
Domino's Pizza Enterprises Ltd (ASX: DMP) has been highlighted as a strong performer within the ASX retail sector. Currently trading at $33.07, which is a 44.18% decrease from the start of the year, the company has been noted for its strategic adjustments. The focus on improving store unit economics over mere expansion is seen as a positive shift. Recent moves to close around 80 underperforming stores in Japan and 20 to 30 in France represent about 8% and 5% of their respective networks. This strategic pivot aims to enhance store performance and profitability.
Additionally, Domino's has made significant investments in digital capabilities, including a revamped loyalty program, which is expected to bolster its competitive edge. Despite the current lower share price, analysts suggest that the stock presents an attractive opportunity based on its future earnings projections.
JB Hi-Fi Ltd (ASX: JBH), on the other hand, has faced mixed reviews. The company’s share price stands at $67.24, reflecting a 23.57% increase for the year. However, concerns about softer growth in the electronics category and heightened competition, particularly from Officeworks, have led to a more cautious outlook. Adjustments to earnings forecasts and expectations of delayed interest rate cuts have influenced the assessment of JB Hi-Fi’s performance. Despite these challenges, the stock has shown continued upward movement.
The ASX retail sector has displayed strong performance amid economic uncertainties. The focus for many companies is on strategic adjustments and investments to maintain growth and competitiveness. While certain shares are performing well and showing potential for future gains, others are facing challenges that could impact their performance in the near term.
Investors are advised to stay informed about these dynamics and conduct thorough research when considering investment opportunities in the retail sector.