5 struggling ASX retail stocks to avoid for the time being

Nick Sundich Nick Sundich, January 31, 2025

5 struggling ASX retail stocks to avoid!

Autosports Group (ASX:ASG)

The wealthy have been less affected by the cost of living crisis, so you’d think a network of luxury car dealerships would stillbe a good investment…right? Either that is wrong, or Autosports Group is just an exception. Only two months since it expected a pre-tax profit of $28m, it now expects it to be $20m. The company has seen difficult vehicle trading conditions. The company’s revenue will be $1.37bn, a figure up 2.4% on the prior corresponding period (i.e. 1HY24). The stock was not punished as much has you might expect, perhaps because investors are waiting for more details which were promised to come when the company reports its formal results on February 20.

 

Bapcor (ASX:BAP)

What a poor year FY24 was for Bapcor, a company that sells and distributes vehicle parts, accessories, automotive equipment and services and solutions, particularly through Autobarn. The company was hit by cost inflation leading to multiple profit downrades, and two CEOS leaving, with the second being the replacement of the first who left 2 days before he was meant to start. Bapcor ultimately delivered a statutory loss of $158.3m, including $253.1m (post-tax) of non-cash impairments. Revenue growth was flat at $2bn and it made a pro-forma profit of $94.8m which compares to $125m in FY23. The company was hit by cost inflation and industry competition.

At its AGM, the company told investors revenue for the first half was flat and savings of $20-30m were expected to be delivered, skewed to the second half of the year. That latter point is critical because investors may not like the vibe of its half-yearly results. There could be some way to the bottom before it starts growing again.

 

Michael Hill (ASX:MHJ)

Michael Hill is a jewellery retail chain. Conditions are difficult due to low consumer confidence and macroeconomic pressures, not to mention higher input costs for gold and mined diamonds. Yes, high gold prices are bad news for some! Now, MHJ’s Australian stores have not done that bad (neither have its stores in Canada), although its New Zealand stores have struggled with revenues falling 12% in FY24 and earnings being impacted by $5m in order to make investments in security measures. The company gave a trading update with unaudited results for 1HY25. Group sales were down 1%, a figure dragged down by New Zealand as Aussie sales grew 0.6%, Canadian sales grew 2.7%, while New Zealand was down 7.8%.

 

KMD (ASX:KMD)

This company hosts the Kathmandu brand which sells outdoor equipment, but now calls itself KMD Brands because it owns Rip Curl and Oboz too. KMD brands released unaudited results for August-December 2024 and group sales were down 2.5%. Sales were up 1.7% November to December, but sales for Q1 were down 5.8%. Oboz, which is a standalone footwear brand, was the poorest performer even falling 5.1% in Q2 and 8.6% in Q1.

 

Accent Group (ASX:AX1)

Accent owns a number of shoe brands including The Athlete’s Foot, Skechers, Timberland, Glue Store and Hype. This company managed to record 4.6% sales growth in 1HY25, but it missed consumer estimates. Like for like sales were only up 2.9%. The company had told investors at its AGM in November sales grew 6.8% in the first 20 weeks of the year. Did it have a bad Christmas trading season? Sales did grow, but slower than in previous years, and promotions (in other words, discounts) reduced the impact of higher sales. Its gross margin was 1% lower and although its EBIT was higher than a year ago, it was boosted by one-off items including the reversal of a historical impairment.

 

 

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