After being hit hard during COVID-19 lockdowns, these ASX retail shares are all racing to new record highs as economies re-open.
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As the Australian economy begins to emerge from the other end of the COVID-19 pandemic, it’s worth taking a look at some companies that may now have significant tailwinds behind them.
Traditional brick and mortar retail was hit especially hard by lockdowns imposed across the country last year. However, many companies still found ways to reach new customers by expanding their digital sales channels. As the economy opens up again and consumers return to department stores and other traditional retail outlets, there is the potential for some brands to have truly banner years. Companies that expanded their market penetration through e-commerce during the pandemic may now even see an uptick in foot traffic as well.
We take a closer look at 3 ASX retail companies that have navigated the pandemic well.
Lovisa Holdings Ltd (ASX:LOV)
Lovisa sells trendy – but affordable – women’s jewellery and accessories. Sales plunged during lockdowns: first-half FY21 revenues were down 9.8% versus the prior comparative period (PcP) to $146.9 million, while net profit after tax (NPAT) plunged 22.6% to $21.5 million.
However, at $14.45 its share price is still pushing towards a new all-time high price. Despite the weak first-half result, Lovisa has reported a strong rebound in customer foot traffic in its Southern Hemisphere stores in the early stages of the second half. It also continued to pursue its international expansion plans throughout the pandemic, acquiring German wholesaler beeline GmBH (and its 80-plus retail outlets spread across Germany, Switzerland, the Netherlands, Belgium, Austria and Luxembourg).
City Chic Collective Ltd (ASX:CCX)
Plus size women’s fashion retailer City Chic Collective has been one of the surprising success stories to emerge from the pandemic. Despite the disruptions to retail trade, the City Chic share price has soared, and it is now up over 180% in the last 12 months.
First-half sales revenues jumped 13.5% versus PcP to $119 million, while NPAT increased by 24.8% to $13.1 million. Customer numbers also skyrocketed: the company claimed to have around 801,000 active customers by the end of the first half, an uplift of 56%.
The success was due in large part to the strength of its online sales channels. Digital sales made up 73% of total sales during first-half FY21, up from 53% for first-half FY20. And, like Lovisa, City Chic has continued to expand internationally throughout the pandemic. 45% of sales were generated in the Northern Hemisphere during the first half (up from just 29% for first-half FY20). The company also recently acquired UK high street brand Evans, signalling its intention to expand into more European markets.
Adairs Ltd (ASX:ADH)
Furniture and homewares retailer Adairs was one of the companies to benefit from the structural shifts that occurred during lockdowns. With people spending more time than ever in their own homes – including working from home, in many cases – homewares sales skyrocketed.
First-half FY21 total sales jumped 34.8% versus PcP to $243 million, with slightly over 37% made online, while NPAT skyrocketed 233.4% to $43.9 million. In fact, the company did so well that it made the decision to refund $6.1 million in Jobkeeper subsidies it received from the government.
The risk with Adairs – and other furniture retailers that blew up during the pandemic, like Temple & Webster Group Ltd (ASX:TPW) – is that the surge in homewares sales may have only been a temporary side-effect of the pandemic. However, Adairs reported that sales have continued to remain high throughout the early stages of the second half, so it will be interesting to watch how it performs for the remainder of FY21.
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Rhys Brock owns shares of Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia has recommended ADAIRS FPO and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.