ASX Stocks
Here Are 4 ASX Retail Stocks to Buy in FY26 — and 4 to Avoid
The Australian retail sector is set for a transformative year in FY26, thanks to the Stage 3 tax cuts, shifting consumer habits, and changing economic conditions. While some retailers are poised to thrive, others face mounting challenges. Here are four ASX-listed retail stocks that look promising for FY26 — and four that investors may want to avoid.
The home improvement sector is set to gain as households redirect tax savings into upgrades. Beacon Lighting, with its vertically integrated model and strong brand presence, is well-positioned to benefit.
Strengths: Sustainable and energy-efficient lighting solutions, strong family ownership (55% held by the Robinson family), and steady expansion in Australia and overseas.
Outlook: High electricity prices and the shift to energy-efficient lighting could drive long-term growth.
Universal Store (ASX:UNI)
Universal Store has emerged as a major winner from the Stage 3 tax cuts, particularly because its target market — Millennials and Gen Z — benefits the most from the revised tax package. Despite stereotypes about young consumers lacking disposable income, recent trends (like the success of major tours) show their willingness to spend.
FY25 Results: $333.5m revenue (+15.5%), $54.6m EBIT (+16%), $34.8m profit (+15.2%)
Dividends: 38.5c per share (80% payout ratio)
Outlook: Analysts forecast $370m revenue and $42m profit in FY26.
Myer (ASX:MYR)
After years of struggle, Myer may finally be turning the corner. The acquisition of Premier Investments’ Apparel Brands and the appointment of Olivia Wirth (ex-Qantas Loyalty) as CEO have reinvigorated its strategy.
Key Strengths: Improved loyalty program (4.6m members, 6.6% CAGR), strong data-driven retail platform, and renewed focus on in-demand brands and efficient sourcing.
Wesfarmers (ASX:WES)
A staple in the ASX retail landscape, Wesfarmers’ diverse portfolio includes Bunnings, Officeworks, Kmart, Target, and more. The company also operates in chemicals, fertilisers, and lithium mining.
Why Buy? Bunnings continues to dominate the hardware sector, while its pharmaceutical and consumer businesses expand. Strong balance sheet and diversified income streams make it a safer long-term bet.
4 ASX Retail Stocks to Avoid in FY26
Woolworths (ASX:WOW)
Australia’s largest supermarket chain underperformed compared to rival Coles in FY25.
FY25 Results: EBIT fell 12.6% to $2.8bn, NPAT declined 17.1% to $1.4bn.
Challenges: Margin compression from higher wages and superannuation costs, coupled with heavy capex spending ($2.5bn).
Verdict: Coles is showing better efficiency and profitability.
Bapcor (ASX:BAP)
Despite leadership changes, Bapcor remains in a tough position. Profits fell over 15% due to write-offs, uncollectible receivables, and weak retail performance in New Zealand.
Red Flags: High management turnover (three directors resigned in one day), and no clear signs of a turnaround.
Cettire (ASX:CTT)
The high-end eCommerce retailer has lost over 90% of its market cap in two years. Tariffs, slowing growth, and questionable business practices have shaken investor confidence.
Concerns: Declining margins, CEO share selling, and weak consumer trust.
City Chic Collective (ASX:CCX)
Once a $6 stock, City Chic is now trading under 10 cents due to failed international expansion and massive inventory issues.
Outlook: No clear growth catalysts, with private equity takeover speculation being the only bullish argument — and that’s a gamble.
Final Thoughts
FY26 offers opportunities for savvy investors to capitalise on Australia’s retail resurgence — but selectivity is key. Universal Store, Beacon Lighting, Myer, and Wesfarmers look well-placed to benefit from consumer spending tailwinds, while Bapcor, Woolworths, Cettire, and City Chic carry higher risk profiles that may not pay off in the near term.