ASX retail shares gear up for Christmas boom

Retail data suggests shoppers are going to spend up big over Christmas. Here are two ASX retail shares with both brick-and-mortar and online offerings.

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A happy man and woman on a computer at Christmas, indicating a positive trend for retail shares

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This year the COVID-19 pandemic delivered a blow to many retailers across Australia. Brick-and-mortar retailers have been under pressure from lockdown restrictions, cautious consumer spending and intense competition from online retailing.

However, there are signs of a turnaround. Roy Morgan, an Australian market research company, conducted a retail sales forecast with the Australian Retailers Association (ARA) in November. They predict Australians will spend over $54.3 billion across retail stores during the Christmas period, which is an increase of 2.8% on the 2019 Christmas period.

Because of the impact of spending patterns caused by COVID-19, the Roy Morgan retail sales forecast also suggested that online retailing is predicted to grow by 6.6% compared to 2019.

Here are two ASX retail shares with both brick-and-mortar and online stores.

Myer Holdings Ltd (ASX: MYR)

The Australian Financial Review (AFR) reports that department stores are expecting the online shopping boom to stick around, post-pandemic. The AFR article quotes former Myer chief executive Richard Umbers as saying “So many people have now shopped online for the first time as a result of COVID, and they like the experience.”

Myer’s group online sales grew by 61.1% to $422.5 million in FY20, which made up 16.7% of total sales in FY20. Overall in FY20, Myer reported a total sales of $2,519.40 million, which is a decline of 15.8% from $2991.8 in FY19. It reported earnings before interest and tax (EBIT) of $78.5 million, which went up 34% from FY19.

During 2020 Myer has received COVID-related rent concessions from its landlords and is negotiating what its future store footprint might look like as it focuses growing on its online offering. The department store reduced its coverage by 14,000 square metres in 2018–19 and 26,000 square metres in 2019–20.

The Myer share price is currently trading at 30 cents, down 37% from 49 cents in January.

Accent Group Ltd (ASX: AX1)

Accent Group is a leading retail and distribution footwear company, with brands including the Athlete’s Foot, Hype DC, Platypus Shoes, Vans, Dr. Martens, Timberland and Palladium etc. It operates across Australia and New Zealand.

With sales growing by 15.70% in the past five months (excluding the impact of Victoria and Auckland’s lockdowns), Inside Retail reports that CEO Daniel Agostinelli is pleased with Accent Group’s strong trade to date and with the performance of the company’s new stores. 

Accent Group has an integrated omni-channel business model, which is a marketing strategy to unite user experiences from brick-and-mortar to mobile/digital shopping. According to the company, the model allowed it to grow its online orders from an average of $200,000 per day to $800,000–$1 million per day from April to June 2020.

Additionally, in the fourth quarter of FY20, more than 50% of digital shoppers were new customers to Accent Group.

This company has a market capitalisation of $1.20 billion, trading at $2.18 per share, which is above its pre-COVID price level.

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Motley Fool contributor MWUaus 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 Bruce Jackson.

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