ASX retail shares are underperforming on Tuesday, with the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) down 0.005% while the S&P/ASX All Ordinaries Index (ASX: XAO) is up 0.2%.
Last month, the market was shocked by inflation data that all but ruled out any further interest rate cuts in 2025.
The Australian Bureau of Statistics reported that, for the 12 months to October, headline inflation increased by 3.8%, up from 3.6% in September, while trimmed mean inflation rose to 3.3%, up from 3.2%. Both were well above the bank’s target range of 2% to 3%.
Homeowners across Australia had been hoping for another rate cut when the Reserve Bank meets for the final time in 2025 next week.
Resurgent inflation is no good for retailers, but consumer confidence is still on the up after three interest rate cuts this year.
The Westpac/Melbourne Institute Consumer Sentiment Index surged above its 100-point confidence baseline for the first time since early 2022 last month.
The index rose 12.8% from 92.1 in October to 103.8 in November, so that bodes well for the critical Christmas retail period ahead.
Let’s take a look at some recent opinions from analysts on 3 ASX retail shares.
2 ASX retail shares to buy: experts
Breville Group Ltd (ASX: BRG)
The Breville share price is $29.81, down 2.3% at the time of writing.
Morgans notes a significant share price decline for the whitegoods and coffee machine manufacturer since its FY25 report in August.
BRG’s share price has retreated ~16% following the FY25 result, which we attribute to expectations of muted earnings growth in FY26 as the group navigates tariff-related margin pressure and an uncertain consumer discretionary backdrop.
However, we believe BRG’s premium positioning, strong focus on new product innovation, and leverage to the coffee category position it to better withstand these pressures.
We view recent weakness in BRG as an opportunity to build a position in a high-quality, well-managed business, with structural coffee tailwinds.
Morgans upgraded its rating on this ASX retail share to buy.
WEB Travel Group Ltd (ASX: WEB)
The WEB Travel share price is $4.85, down 0.5% at the time of writing.
Last week, WEB reported a 20% increase in revenue to $204.6 million and a 17% jump in underlying EBITDA to a record $81.7 million.
Morgans commented:
Pleasingly, WEB’s trading update was stronger than expected and top line growth has accelerated. FY26 guidance was slightly stronger than expected and we have upgraded our forecasts.
WEB’s outlook comments for FY27 were also upbeat.
The broker raised its rating on this ASX retail share to accumulate with a 12-month price target of $5.20.
Analyst says this stock is a sell
Accent Group Ltd (ASX: AX1)
The Accent share price is $1.02, up 1.7% on Tuesday.
On The Bull this week, Niv Dagan from Peak Asset Management revealed a sell rating on the footwear retailer.
The company recently downgraded earnings before interest and tax (EBIT) guidance for fiscal year 2026 to between $85 million and $95 million. The company generated EBIT of $110.2 million in full year 2025.
The retail environment remains challenging as cost-of-living pressures are driving consumers to defer discretionary purchases and seek value.
Accent shares have endured a tough year.
The ASX retail share is down 57% in the year to date, and dropped 18% over the past month alone.
Dagan added:
Despite the share price correction, valuation risk remains given the earnings downgrade and structural margin headwinds.
Near term catalysts are limited.
The post ASX retail shares: 2 to buy and 1 to sell amid rising inflation appeared first on The Motley Fool Australia.
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More reading
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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent 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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