Yesterday, the Australian Bureau of Statistics stunned the market after releasing a preliminary report which showed a surge in retail turnover. According to the data, retail turnover for March 2020 was a record 8.2% higher on month-to-month turnover.
The record turnover was fuelled by a 22% surge in consumer spending at supermarkets. The data reflects the panic buying that has been induced by the coronavirus pandemic, with shoppers hoarding essential items such as toilet paper, pasta, flour and rice.
Although supermarkets dominated the report, consumer discretionary retailers have flown under the radar. Here are 4 ASX retail shares that have soared more than 100% in the past month.
Adairs Ltd (ASX: ADH) – 152% higher
Exactly a month ago, the Adairs share price was trading at an all-time low of 44 cents per share. Since then, the home furnishings retailer has seen its share price surge more than 150% in a month. Adairs operates more than 160 specialty stores in Australia and New Zealand and recently acquired Mocka, an online home and living products designer and retailer.
Late last month, Adairs informed the market that it was temporarily closing its stores in all locations in accordance with government requirements to curb the coronavirus pandemic. The company expected store closures to last for 4 to 6 weeks and noted that online channels will continue to operate in Australia.
City Chic Collective Ltd (ASX: CCX) – 158% higher
City Chic is a multichannel retailer that specialises in catering for plus size women. The company is a collective of customer-led brands that offer a range of clothing, accessory and footwear options. The retailer boasts a network of over 100 physical stores in Australia and New Zealand which contribute approximately 30% to total sales.
In response to the coronavirus pandemic, City Chic temporarily closed its physical stores in Australia and New Zealand. However, the company continues to serve customers with its strong online channels remaining open. After being initially sold-off, the City Chic share price has surged more than 158% in the past month.
Temple & Webster Group Ltd (ASX: TPW) – 114% higher
The Temple & Webster share price has also managed to more than double in the past month and is actually trading over 26% higher for the year. Temple & Webster is Australia's largest online retailer of furniture and homewares, offering more than 150,000 products.
Temple & Webster boasts an innovative drop-shipping model and estimates that currently only 4-5% of homeware and furniture sales are executed online. Online participation is forecast to surge and drive growth with faster internet and new technologies improving the online experience for consumers.
Lovisa Holdings Ltd (ASX: LOV) – 108% higher
Lovisa is a leading retailer in fast-fashion jewellery, strategically targeting the affordable jewellery segment. The company's business model supports high gross margins and boasts a fast supply chain that requires only 8 to 10 weeks for products to reach the store from development.
As a result of the coronavirus pandemic, Lovisa was forced to close its 154 stores in Australia and 22 stores in New Zealand, as well as many others around the world. However, with its online channels remaining open, Lovisa has seen its share price rocket more than 108% in the past month.
Should you buy ASX retail shares?
Although consumer discretionary spending has struggled in the coronavirus pandemic, I believe there is still value to be found in the sector. With consumer behaviour changing, retailers will need to adapt in order to capture decent market share.
The common denominator among the retailers listed here is that they all offer growing online channels in addition to exposure to domestic and international growth prospects.
Given the uncertain nature of the coronavirus pandemic, I think it would be rash to jump ahead and buy these retailers because they have recovered. Instead, I think a prudent strategy would be to keep a watchlist of ASX retail shares and wait for a pullback before making an investment decision.
