The two ASX shares in this article could be good considerations to look at for the long-term.
Both of these businesses had a strong FY21 and want to grow over the coming years.
One of them is an online-only business, whilst the other has only just started tapping into the potential of e-commerce.
At the current share prices, these two companies may be good options:
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Nick Scali Limited (ASX: NCK)
Nick Scali is an ASX retail share that sells furniture pieces, although it's planning to offer more products over time.
FY21 was a very strong year for the business. It delivered sales revenue growth of 42.1% to $373 million, whilst underlying net profit after tax (NPAT) doubled to $84.2 million. The earnings before interest and tax (EBIT) margin improved by 940 basis points to 32.7%.
It added three new showrooms over the year, adding one in NSW, one in Victoria and one in New Zealand. In July 2021 the company opened another showroom in New Zealand. Management said that the company will benefit from a full year of trading from these new stores. It now has a network of 61 showrooms with a long-term target of 85.
The ASX share generated online written sales orders for FY21 were $18.3 million compared to $3 million in FY20. The EBIT contribution from the online channel for FY21 was $8.8 million, compared to $0.6 million in the prior year.
Whilst July 2021 written sales orders were down 27% year on year, those orders were up 24% on July 2019, despite the Sydney lockdown. New Zealand written sales orders were up 91% and online growth was 88% in July 2021.
Nick Scali says that the company's future will be primarily driven by the continuing store network growth and increasing online penetration.
Macquarie Group Ltd (ASX: MQG) currently rates Nick Scali as a buy with a price target of $13. It's attracted to the increasing number of stores, good trading and the possibly of bolt-on buys. Macquarie thinks Nick Scali is valued at 15x estimated forward earnings.
Adore Beauty Group Ltd (ASX: ABY)
Adore Beauty is an e-commerce business that sells beauty products through its website. It actually has around 10,800 products from 260 brands.
The ASX share is benefiting from the structural shift to online and ongoing retention of new customers added during COVID-19.
Adore Beauty is pursuing a growth strategy with heavy investing to build on its online market leadership position. Businesses believe that it's well positioned to capture market share in a large and growing market, benefiting from structural tailwinds.
Over the long-term, scale benefits are expected to increase operating leverage and achieve more earnings before interest, tax, depreciation and amortisation (EBITDA) profit margin growth.
In FY21, revenue rose 48% to $179.3 million. Active customers rose 39% to 818,000 and 'returning customer' growth was 64% year on year. Annual revenue per active customer increased 7% to $219, driven by "strong" customer retention and increasing average order value.
Despite the heavy investment, profitability is rising. The gross profit margin increased by 1.2 percentage points to 33.1% whilst EBITDA jumped 53% to $7.6 million.
In the first few weeks of FY22, the ASX share saw revenue growth of 26% on the prior corresponding period.
UBS currently rates Adore Beauty as a buy, with a price target of $6.
