A recent report from broker UBS has predicted that online sales will double post-pandemic, with a slew of traditional retailers expected to close shop permanently.

The report follows data from the Australian Bureau of Statistics released yesterday, which revealed that retail spending fell a record 17.9% in April. Social distancing and travel restrictions have sapped demand from traditional retail outlets, with consumers moving to online platforms.  

Here are 3 retail shares on the ASX that have outperformed during the pandemic and are well poised to adapt to the new age of retail.

Adairs Ltd (ASX: ADH)

Adairs is a home furnishings retailer that boasts more than 160 speciality stores in Australia and New Zealand. In addition to physical stores, the company also has a robust and growing online presence. Adairs recently released a trading update, informing the market that online sales surged 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 Australian sales over the period only being down approximately 37% compared to last year. Since 23 March, the Adairs share price has surged more than 285%, reflecting substantial interest from investors.

Kogan.com Ltd (ASX: KGN)

Kogan.com is probably one of the most prominent online retailers on the ASX. The company has been on the receiving end of huge demand as consumers flock to stock up on essential and discretionary items. Kogan released a trading update recently which reported a 100% growth in gross sales and 150% increase in gross profit for April.

The company also saw the largest monthly increase in active customers since its IPO. This surge in demand has been reflected in the Kogan share price which has bounced more than 155% from its March low. Kogan also made headlines recently, announcing that it had acquired furniture and homeware retailer, Matt Blatt.  

Temple & Webster Group Ltd (ASX: TPW)

Believe it or not, the Temple & Webster share price has recovered more than 155% from its low in March and is currently trading near all-time highs. Temple & Webster is Australia’s largest online retailer of furniture and homewares and has thrived during the coronavirus pandemic.

The company recently provided an update, reporting record numbers in new and repeat customers, whilst also reporting that second-half revenue (to 24 April 2020) had increased by 74% year-on-year.  

Foolish takeaway

The move online is not only limited to traditional ASX retail shares. Even essential stalwarts like Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) have seen a surge in online participation and are preparing to meet future demand by investing heavily in the segment.

I think a prudent strategy for investors is to compile a watchlist of ASX retailers that will thrive in the next 20 years and wait for a good buying opportunity.

More reading

• Is the Wesfarmers share price in the buy zone?
• Down 10% in 2 months. Are Coles shares a buy today?
• Aussie retail numbers paint a gloomy ASX picture
• $2,500 invested in these 3 ASX shares could make you a fortune in 10 years
• The Bubs share price is up 20% in May, will it catch up to the A2 Milk share price?

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of Woolworths Limited. 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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The Aristocrat Leisure Limited (ASX: ALL) share price could be on the move this morning following the release of the gaming technology company’s half year results.

How did Aristocrat Leisure perform in the first half?

For the six months ended March 31, Aristocrat posted a 7% increase in operating revenue to $2,251.8 million. This was driven by a 27.3% increase in Digital segment revenue to $1,044.6 million, which offset declines in its Land-based segments.

However, due to the lower share of Land‐based revenue because of COVID‐ 19 impacts and its investments in user acquisition for its Digital portfolio, the company’s EBITDA margin fell 5 percentage points to 31.4%.

This led to normalised EBITDA falling 7.7% on the prior corresponding period to $707.6 million and normalised NPATA dropping 12.8% to $368.1 million.

On a reported basis, NPATA jumped 232.1% to $1,367.4 million. This was due to a one-off ~$1 billion deferred tax benefit. This follows group structure changes announced in November 2019, which are expected to generate long term cash tax savings.

As was widely expected, Aristocrat has decided to suspend its dividend in order to enhance its liquidity position and balance sheet.

Land-based segment.

During the half, Aristocrat’s Class III Premium installed base grew 9.4% and its Class II installed base grew 1.8%.

Management notes that this was driven by continued penetration of leading hardware configurations and high-performing game titles.

Its market-leading average fee per day (pre-COVID-19 casino closures) increased 0.3% to US$50.20. On an unadjusted basis, the average fee per day for the period was just above US$46.

Digital segment.

The growing Digital business was the star of the show during the half. It delivered double-digit growth in bookings, revenue, and profit during the half.

The RAID: Shadow Legends game was a highlight, continuing its impressive growth trajectory by generating US$160 million in bookings over the six months. This was supported by additional targeted user acquisition (UA) investment.

Speaking of which, the company’s total UA spend grew to 29% of Digital revenue in the period. This was due to the availability of quality investment opportunities.

Another big positive was its growth in Average Bookings Per Daily Active User (ABPDAU). It grew over 30% to US$0.50 due to management’s successful focus on monetisation and the scaling of RAID: Shadow Legends.

Management commentary.

Aristocrat’s chief executive officer and managing director, Trevor Croker, was pleased with how the company performed given the challenging trading conditions.

He commented: “Aristocrat delivered a result for the half year to 31 March 2020 that demonstrates our core strengths and the relevance of our product-led strategy, despite the unprecedented challenges generated by the COVID-19 pandemic.”

“Our progress in driving share through outstanding product and diversifying revenue streams – including across attractive Digital genres and titles – are also evident in this result,” he added.

Looking ahead, the chief executive remains focused on growing the business when trading conditions improve.

He said: “We will also continue to drive our strategic advantages in product, with aggressive investment in our core growth engines of Design and Development and User Acquisition to target share and continue to diversify our portfolios.”

“In Land-based, we will execute our ambitious plans to partner and grow with our customers as conditions improve. And in Digital, we will accelerate execution of our portfolio-based growth strategy as we further mature and scale the organisation,” Croker added.

No guidance was given for the second half, which is understandable given the current environment.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Why this ASX 200 stock could surge higher tomorrow
• Macquarie picks the best stocks to buy for the post COVID-19 rebound
• Leading brokers name 3 ASX shares to buy today
• Why Aristocrat Leisure, Newcrest, Santos, & Zip Co shares are charging higher

Motley Fool contributor James Mickleboro 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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ASX tech shares have not all enjoyed the same fortune in 2020. While the S&P/ASX 200 Index (ASX: XJO) has slumped 16.62% this year, investors have struggled to value many of our largest listed technology companies.

We’ve seen the Afterpay Ltd (ASX: APT) share price rocket from a 52-week low of $8.01 per share to a new 52-week high of $43.68 in the space of a couple of months. I think a 445% share price increase in such a short space of time means the ship may have sailed on Afterpay for now.

However, if you’re looking for ASX tech shares that are good value today, check out one of my top picks below.

Why this ASX tech share is in the buy zone

Let’s ignore the big winners in 2020 like Afterpay and NextDC Ltd (ASX: NXT) for just a moment. While their recent gains are good news for shareholders, the rest of us may be experiencing a bit of FOMO!

That’s why I’m focusing on what could be ‘the next Afterpay’. Sitting at the top of my list is one of my favourite ASX tech shares, Xero Limited (ASX: XRO).

Xero shares haven’t crashed lower in 2020 and are actually outperforming the ASX 200 by quite a margin. Whilst the Xero share price has only edged 0.20% higher this year, it has been far less volatile than many of its ASX 200 cohorts. 

It’s true that the ASX tech share is already highly valued. However, I don’t think this means it can’t continue to grow well into the future. Xero is still continuing to sign large clients and I can see demand for its services increasing in the current climate. Businesses need to carefully manage their obligations under government stimulus programs like JobKeeper and Xero’s platform is perfect for just that.

Foolish takeaway

Xero shares have been holding their value in 2020. That’s a real plus for investors given it is a highly valued growth share. Despite the fact some believe it is currently overvalued, I like Xero’s prospects this year and think we could see a solid earnings result in August 2020. Therefore, I still like this share for adding some growth potential to a diversified portfolio.

More reading

• Afterpay share price on watch after hitting 5 million active US customers
• Is the Wesfarmers share price in the buy zone?
• 3 five-star ASX 200 shares to buy right now
• 5 things to watch on the ASX 200 on Thursday
• Save your future self from financial misery

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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.

The post Why I’d invest $1,000 in this ASX tech share today appeared first on Motley Fool Australia.

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