Who said ASX retail shares were dead?

With states beginning to ease coronavirus restrictions, here are 3 ASX retail shares that could be poised for a strong bounce.

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The S&P/ASX 200 Index (ASX: XJO) has bounced more than 16% after bottoming on 23 March. Since that date, the share prices of some ASX retail shares have surged more than 150% in comparison.

As some Australian states slowly start to ease coronavirus restrictions, consumers have flocked to retail outlets in order to unleash their pent-up demand.

A recent article in the Australian Financial Review cited statistics from data firm Kepler Analytics which showed that retail spending in Queensland surged more than 70% in the most recent week to Sunday. Sales also rocketed in other states that have loosened restrictions.

So with this in mind, here's how some ASX retail shares have been faring.

Adairs Ltd (ASX: ADH)

Yesterday, Adairs provided a trading update informing the market that online sales surged more than 221% for the 5 weeks that stores have been closed. Despite only contributing 20% to Adairs' total sales, strong growth in online transactions has resulted in sales over the period only being down approximately 37% compared to last year. Since 23 March, the Adairs share price has surged more than 195%, reflecting substantial investor optimism.

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. In its recent announcement, the company informed shareholders that stores will be progressively re-opened from 7 May.

City Chic Collective Ltd (ASX: CCX

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, footwear and accessories. The retailer boasts a network of over 100 physical stores in Australia and New Zealand which contribute approximately 30% to total sales.

Despite temporarily closing its physical stores, the company continues to serve customers with its strong online channels. After being initially sold-off, the City Chic share price has surged more than 190% from its low in mid-March.

Lovisa Holdings Ltd (ASX: LOV)

Lovisa is a leading retailer in fast-fashion jewellery which targets the affordable jewellery segment. Lovisa closed 154 of its physical stores in Australia and 22 stores in New Zealand in response to the coronavirus pandemic.

However, with its online channels remaining open, Lovisa has seen its share price rocket more than 175% from its low in mid-March. Lovisa is also able to get back into action quickly, with the company's business model boasting a fast supply chain that requires only 8 to 10 weeks for products to reach the store from development.

Should you buy?

Although the statistics mentioned points to a recovery, I think the retail sector has a very long and tough journey ahead. It is also important to note that the ASX retail shares that have bounced strongly from their lows have certain characteristics in common. They have a strong and growing online presence, whilst also exposure to international growth areas.

Although there is value to be found, I think a prudent strategy for investors is to compile a watchlist of stocks that could thrive in a post-coronavirus world.

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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