We all know the damage that pandemic lockdowns and social restrictions have done to the retail sector. Traditional retailers – particularly those with a large brick-and-mortar presence – have struggled over the last 18 months.
Despite a recent rally, shares in Myer Holdings Ltd (ASX: MYR) are barely above their pre-COVID levels. And shares in Kathmandu Holdings Ltd (ASX: KMD) are still almost 50% off their February 2020 prices. Many other ASX retail shares have also suffered similar declines.
But despite these difficult market conditions, there is a new generation of ASX retail companies that have seen their share prices soar during the pandemic. These are companies with little (or no) physical shopfronts and that rely almost entirely on digital sales channels.
Investors have been favouring these companies over their traditional peers – and have sent their share prices rocketing into the stratosphere.
Let’s look at three of the ASX retail shares with some of the biggest price gains so far this year.
Dusk Group Ltd (ASX:DSK)
Dusk only listed on the ASX in November 2020 – but has already made quite an impression. Its shares are up almost 40% so far in 2021 (to $3.10, as at the time of writing).
Dusk specialises in home fragrance products such as candles, diffusers and essential oils. With people spending a lot more time at home during lockdowns, it’s easy to see why demand for its products has spiked.
However, Dusk is also something of an outlier on this list as it still makes the majority of its revenues through traditional channels. That said, online sales increased by 27% in FY21 and made up 7.5% of the year’s total sales.
FY21 was a bumper year for the company with sales up over 47% (to $148.6 million). As well, disciplined cost management meant that pro forma net profit after tax (NPAT) surged over 225% year-on-year (to $26.8 million). Pro forma NPAT is reported NPAT adjusted for some one-off items – the most notable of which was $6.6 million in costs associated with the company’s initial public offering.
City Chic Collective Ltd (ASX:CCX)
City Chic specialises in plus-size women’s fashion. It has expanded significantly during the pandemic and now has a strong presence in both the US and UK markets. City Chic also has a brick-and-mortar presence but pivoted strongly towards its digital sales channels last year.
City Chic reported sales revenues of $258.5 million for FY21, a year-on-year increase of almost 33%. This was driven by online sales which jumped 49.3% and made up more than 70% of City Chic’s total sales for the year. The result also showed the benefits of the company’s international expansion plans with more than 44% of sales coming from overseas markets.
The City Chic share price has surged almost 60% higher this year to $6.30 (as at the time of writing) and just recently set a new 52-week high price of $6.49.
Cettire Ltd (ASX:CTT)
The standout performer on this list of ASX retail shares is online luxury fashion retailer Cettire. Its share price has rocketed a scarcely believable 602% higher so far in 2021 to $3.49 (as at the time of writing). The massive share price gains have come on the back of incredibly strong FY21 financial results.
The company beat its own upgraded earnings guidance for the year, reporting sales growth of 304% year-on-year (to $92.4 million). The result also showed that the company was beginning to develop a loyal customer base, with 40% of FY21 sales from repeat customers (up from just 26% in FY20).
The positive momentum seems to have carried forward into FY22, with July unaudited gross revenue up 181% versus July 2020.