Australia is officially in recession, with the economy shrinking 0.3% in the March quarter. But this is a recession like no other – coronavirus lockdowns and travel restrictions may be shrinking the economy, but they are also redirecting spending.
Consumers unable to enjoy holidays and travel are shifting their spending to the home, resulting in booming sales for some. Here are three ASX retail shares raking it in regardless of recession.
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JB Hi-Fi Limited (ASX: JBH)
JB Hi-Fi sales have surged as customers set up home offices and invest in entertainment options. Full year sales grew 11.6% to $7.9 billion as customers spent more time working, learning, and entertaining at home.
This led to a 33.2% increase in profits which reached $332.7 million. JB Hi-Fi has also been investing in its e-commerce capacity, which has paid off with online sales up 50% over the year and 134% in the fourth quarter. This capacity will help the ASX retail share as online sales ramp up with Melbourne store closures.
Kogan.com Ltd (ASX: KGN)
Online-only retailer Kogan has shone in 2020 with a surge in active customers driving record performance. Gross sales increased 39.4% on the prior year to $768.9 million as customers shifted to online shopping in the face of store closures.
CEO Ruslan Kogan said: "There is a retail revolution taking place as more and more shoppers learn about the benefits of E-commerce." This revolution resulted in a 55.9% increase in Kogan's profits, which reached $26.8 million in FY20. This enabled the payment of a final dividend of 13.5 cents per share, up 64.6% on the previous year.
Adairs Ltd (ASX: ADH)
Omni-channel homewares retailer Adairs has benefitted from customers spending more time at home, and subsequently more on Adairs products.
Despite widespread store closures in April and May, the group grew sales 12.9% to $388.9 million in FY20. Online sales were a strong contributor, accounting for $124.2 million or 31.9% of total sales. Online furniture retailer Mocka, which Adairs purchased last year, saw sales increase 50.2%.
The strong sales growth led to a 19% increase in net profit after tax, which reached $35.3 million. This allowed Adairs to declare a dividend of 11 cents per share (fully franked).
Foolish takeaway
We might be in recession, but while lockdowns and travel restrictions continue, discretionary spend is being diverted to home furnishings and entertainment. That leaves these ASX retail shares to rake in the proceeds.
