5 ASX Stocks That Are Discretionary More Than Ever And Feeling The Squeeze, And 5 ASX Stocks That Aren’t!

Consumer-focused ASX Stocks that are discretionary are more than ever in an environment where elevated interest rates, inflation and mortgage repayments are reshaping household spending patterns.

The underlying economic logic is straightforward: when real incomes are squeezed, consumers prioritise essentials such as food, utilities and healthcare, while postponing or trading down on non-essential purchases. Data across Australia confirms this shift, with spending increasingly directed toward groceries and housing, and less toward apparel, electronics and other optional goods. That dynamic has had a direct and observable impact on listed companies, particularly those exposed to retail cycles.

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5 ASX Stocks That Are Discretionary More Than Ever And Feeling The Pinch,

JB Hi-Fi (ASX:JBH)

is one of the clearest examples of a discretionary retailer. It sells consumer electronics, appliances and entertainment products, categories that are typically postponed during economic stress. The cost-of-living squeeze has weighed on volumes in the sector broadly, with reports of flat or declining sales across retailers as consumers cut back. However, JB Hi-Fi has demonstrated relative resilience because of its low-price positioning, capturing demand from value-conscious consumers trading down rather than exiting the category entirely. This highlights an important nuance: while discretionary demand falls, it does not disappear; it becomes more price sensitive.

But ultimately, we decided to put it as a company that could suffer because a key part of its model is having consumers update their tech constantly, we’re talking getting the newest iPhone every year. But in a cost of living crisis, consumers may think it isn’t the end of the world if they don’t upgrade each year.

Aristocrat Leisure (ASX:ALL)

Aristocrat, an ASX giant in the gaming and digital entertainment space, offers a different angle on discretionary spending. Its revenues are closely linked to disposable income and leisure budgets, which can be highly sensitive to economic pressures. Although historically the company has delivered strong margin performance, its stock has shown volatility as investor sentiment fluctuates in response to consumer spending patterns. Entertainment and leisure services are often among the first categories affected when households reduce non-essential expenditures, explaining Aristocrat’s mixed performance despite structural growth in areas like iGaming.

Its most recent results were not bad, with 11% profit growth, but shares fell because it was softer than expected especially if you dig into the specific results in the gaming operations division which suggests spend per user is not accelerating, if at all. Management commentary and AGM updates into 2026 pointed out that certain digital and online segments, which are typically seen as a reflection of consumer demand, have shown softer momentum than in previous cycles. This doesn’t directly prove consumers are cutting discretionary spending across the board, but it does suggest the business is feeling some clamp‑down on faster‑growth consumer behaviours, especially where spending is clearly discretionary (e.g., online gaming, interactive casino products)

Temple and Webster (ASX:TPW)

TPW been one of the more high‑profile discretionary names on the ASX in recent years, built around online furniture and homewares. For the full year ended June 2025 it delivered strong top‑line growth of about 21 per cent to roughly A$600 million in revenue, continuing its structural expansion in the home category that had been underpinned by investments in technology and customer acquisition. Its profit also surged sharply in that period before FY26, reflecting both improved operations and scale.

However, the first half of FY26 has been more challenging. Temple & Webster reported that revenue climbed about 20% on the prior period to around A$376m, but profitability lagged and net profit fell sharply, down around 36% compared with the prior year with margins compressed to roughly 3.6%. Investors reacted poorly to this earnings miss relative to expectations, sending the share price significantly lower and illustrating how softer discretionary spending, particularly in furniture and larger home purchases, can quickly erode confidence even when revenue growth continues. Of course that was before the Iran conflict broke out. Brace yourselves TPW investors.

Lovisa (ASX:LOV)

This company, an owner of jewellery outlets, has generally been a stronger story within discretionary retail. In its FY25 full‑year results, Lovisa delivered a solid performance with revenue up about 14% to nearly A$798m and net profit rising close to 5%. Gross margins expanded, reflecting effective pricing and inventory control, and the company continued expanding its global store footprint with over 1,000 stores in more than 50 markets.

Early trading into FY26 (i.e. Q3 of CY25) also suggested continued momentum, with comparable store sales growing modestly and total sales up significantly in the first weeks of the new financial year. Even so, Lovisa is not immune to cost‑of‑living pressures. A trading update in late 2025 saw its share price fall more than 10% on weaker‑than‑expected sales growth, a reminder that even well‑positioned specialty retailers can feel the pinch when consumers trim discretionary purchases.

Premier Investments (ASX:PMV)

PMV arguably deserves some slack given major corporate changes over the last year. Historically the owner of several fashion apparel brands including Just Jeans, Jay Jays, Portmans, Dotti, and Jacqui E, Premier sold these Apparel Brands businesses to Myer in a large transaction completed in early 2025 and returned over A$1bn to shareholders as part of that deal. The sale fundamentally altered Premier’s operating profile, leaving it focused on its remaining high‑margin retail brands, notably Peter Alexander and Smiggle, along with a meaningful strategic stake in Myer (ASX:MYR) and in Breville (ASX:BRG).

Premier’s FY25 net profit rose about 31% to around A$338m, boosted by the apparel divestment and associated distribution. Retail sales from Peter Alexander and Smiggle were modestly higher, but global sales in Premier’s continuing operations were essentially flat, growing less than 1%, and underlying margins shrank moderately. This mixed performance, combined with softer guidance for early FY26 and pressure on discretionary spending, saw Premier’s share price slide to multi‑year lows.

Investors remain cautious because sustaining growth now requires strong performance from a narrower portfolio and execution of international expansion strategies, particularly in Peter Alexander’s UK rollout, amidst ongoing cost‑of‑living headwinds.

5 ASX Stocks That Aren’t Discretionary!

Coles (ASX:COL)

Coles is currently the clearest example of the dynamic that stocks which are not discretionary will not see an impact. Throughout the pandemic it continued to see revenue growth and this continued post-pandemic. Its FY25 result showed approximately 6% revenue growth, with supermarket sales rising 4.3% and total sales reaching $44.35bn. Net profit exceeded $1bn, and importantly, growth was supported by both volume and strategic execution rather than pricing alone. E-commerce sales increased strongly, with penetration above 11%, indicating that Coles is capturing structural as well as cyclical demand.

This momentum has continued into FY26, with early trading updates showing supermarket sales growth of around 4.8–4.9%, comfortably ahead of expectations and ahead of its main competitor. The significance of this is that even in a constrained consumer environment, Coles is not merely holding ground but gaining share, suggesting that grocery demand combined with competitive pricing can translate into real earnings growth.

Woolworths (ASX:WOW)

Yes, we know this is obvious but we couldn’t exclude this company. It had been lagging Coles for a couple of years, but more recent trading updates indicate improving momentum. First-half FY26 sales rose 3.4% to over $37bn, with net profit increasing by 16.4% on an underlying basis and supermarket earnings up nearly 10%.

The turnaround has been driven by price investment, improved execution and a stronger fresh food offering, all of which are directly aligned with current consumer behaviour. This reinforces the idea that even where margins are pressured, volume resilience and operational adjustments can restore earnings growth over time. Woolworths therefore still fits within the “non-discretionary” category, but with the caveat that execution risk is higher than in previous cycles.

Telstra (ASX:TLS)

This company remains one of the more structurally defensive names on the ASX. While detailed FY25 figures are less headline-driven than retail, the company’s earnings profile continues to be supported by recurring mobile and broadband revenues. Telecommunications demand is highly inelastic, and Telstra’s scale combined with its dominant network position provides a degree of pricing power and customer retention that is largely absent in discretionary sectors.

Its strategy in recent years has focused on margin expansion through cost control and higher-value plans, rather than pure volume growth. This is consistent with a defensive growth profile: modest but stable revenue increases combined with improving profitability. The company’s most recent results, for 1H26, saw an 8% jump in profit and 4% growth in revenue and it guided to $8.2-8.4bn earnings for the full year whilst increasing its share buyback program from $1bn to $1.25bn

APA Group (ASX:APA)

APA represents a different type of defensiveness, grounded in contracted cash flows rather than consumer demand. Its revenues are largely derived from long-term gas transportation and energy infrastructure agreements, which insulate it from short-term fluctuations in household spending. While it does not exhibit high growth in the traditional sense, its earnings visibility and inflation-linked contracts provide a form of “real” growth, particularly in an environment where energy demand remains structurally supported. This makes it less exposed to the cost-of-living cycle and more aligned with long-duration, infrastructure-style returns.

In 1H26, its EBITDA rose 8% and the company noted this was driven by high inflation-linked tariffs. It wouldn’t be unreasonable to expect a major boost to its results for the second half, even if we’ll need to wait a few months to quantify the impact.

Wesfarmers (ASX:WES)

We know that it has some discretionary exposure, but we think it deserves inclusion here. The company’s Bunnings division continues to benefit from both discretionary and non-discretionary spending, particularly maintenance and repair activity, which tends to hold up even when new project spending slows.

Kmart, meanwhile, has performed strongly by positioning itself as a low-cost retailer, effectively capturing trade-down behaviour from consumers seeking value. This has allowed Wesfarmers to maintain earnings resilience even as broader retail conditions weaken. The result is a hybrid model: partially exposed to discretionary demand, but with enough value positioning and diversification to sustain growth. In 1H26, it delivered 3% higher revenue, 8% higher EBITDA and a 9% higher profit.

The common thread is that these companies are aligned with essential spending or structural demand drivers, allowing them to either maintain or rebuild growth even as household budgets remain under pressure.