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Summary
- COVID-19 pandemic has reshaped the retail experience, with social distancing and other norms pushing people towards digital platforms.
- Small-cap retailers like AuMake, Harris Technology and Temple & Webster have highlighted impressive financial outcomes.
- AuMake registered a 35 per cent increase in group revenue and 130 per cent surge in online sales for FY20. The company has plans to boost its online capability and online experience during FY21.
- Harris Technology has started the new financial year with a record monthly revenue of AUD 3.44 million (unaudited) in July 2020.
- Temple & Webster witnessed a robust FY20 performance with revenue up by 74 per cent year on year and positive cash flow in the financial year. Strong revenue growth of 161 per cent reported until 27 August.
The pandemic period has not been easy for retailers whose stores remained closed during the lockdown period. Even when the physical stores began to reopen, there were new guidelines to follow, which restricted the number of people inside stores at a given time.
Nevertheless, there has been online shopping boom over the past few months, which significantly benefitted ASX e-commerce businesses. Consequently, those that were initially reluctant to embrace this transformation also joined the race. Additionally, more and more retailers are now focusing further on their digital platforms.
Here in this article, we are discussing three ASX-listed small-cap retailers, which have experienced robust growth.
AuMake International Limited (ASX: AU8)
Specialist retailer targeting the Asian market, AuMake International Limited (ASX: AU8) offers high-quality and authentic products from Australia and New Zealand. On 31 August 2020, the company released its FY20 results, reporting significant improvement in financial performance across all key metrics for the period.
For 12 months to 30 June 2020, the company highlighted:
- Total group revenue of AUD 60 million, up by 35 per cent year-on-year, backed by the strategic acquisition and integration of Broadway Group
- Total group gross profit of AUD 25.3 million, representing an increase of 232 per cent on FY19
- Online sales of AUD 14.7 million, up 130 per cent on FY19 with gross profit of AUD 2.1 million, up by 158 per cent year-on-year
- Gross profit margin of 42.2 per cent, up 145 per cent vs FY19, due to an increase in sales of higher-margin products
- Operational cash inflow of AUD 3.0 million for FY20, compared with an outflow of AUD 6 million in FY19
- Pro forma operating EBITDA loss of AUD 2.9 million, 37 per cent improvement when compared with the same period a year ago, owing to increased online sales as COVID-19 impacted inbound tourism to Australia
- Pro forma NPAT was a loss of AUD 4.4 million (a 46 per cent improvement vs FY19)
- Cash at the bank of AUD 8.2 million as at 30 June 2020 with no debt
During FY21, the company plans to boost its online capability and online experience in collaboration with Shenzhen Jiezhou Technology Co, Ltd. Moreover, AU8 intends to grow its existing unique visitor database, reinvigorate product mix, selectively reduce physical store footprint and employ new retail concepts.
On 4 September 2020, AU8 closed the day's trade flat at AUD 0.062 with a market capitalisation of AUD 22.87 million. In the last one-month period, the stock has delivered a return of more than 31 per cent. However, its last one-year return was noted at -55.71 per cent.
Harris Technology Group Limited (ASX:HT8)
Online consumer goods vendor, Harris Technology Group Limited (ASX:HT8) released a business update on 31 August 2020. The company achieved a monthly record amount of AUD 3.44 million in audited revenue for July 2020, compared with AUD 780,000 in the same period a year ago.
HT8 attributed sales growth to traditional IT/CE business, which achieved a monthly revenue record, and recently established Pro-Hygiene division, which experienced robust increase in sales driven by demand-induced by recent Victorian Government restrictions.
The company also updated to have successfully completed a private placement in mid-August 2020, which lead to AUD 3.5 million in new funds. The Share Purchase Plan for existing shareholders closed on 4 September 2020 is expected to raise AUD 1.4 million in new funds.
Harris Technologies CEO Garrison Huang highlighted that the company started the new financial year on a positive note with strong momentum of last quarter extending into the new financial year.
On 4 September 2020, HT8 closed the day's trade at AUD 0.130, with a market cap of AUD 30.81 million. The stock had delivered a return of more than 664 per cent in the last one year and 56.63 per cent in the last one-month period.
Temple & Webster Group Limited (ASX:TPW)
Temple & Webster Group Limited (ASX:TPW) will be added to S&P/ASX 300 Index, effective 21 September 2020, according to September 2020 Quarterly Rebalance of the S&P/ASX Indices announced by S&P Dow Jones Indices.
Good Read: Superlative Returns for Ecommerce & Technology Share Prices: Altium and Temple & Webster
TPW, which is the country's largest e?commerce company in the furniture and homewares market, reported revenue of AUD 176.3 million up 74 per cent year on year, for FY20. EBITDA stood at AUD 8.5 million, compared with AUD 1.5 million in FY19. NPAT for the period was AUD 13.9 million including an income tax benefit of AUD 5.9 million. Cash flow was positive in FY20 with cash of AUD 38.1 million and no debt.
- Active customer base up 77 per cent YoY to ~480,000
- Trade and Commercial division up 68 per cent YoY
- Customer satisfaction reached record levels in last quarter, NPS of more than 65 per cent
Image source: Company’s announcement (31 August 2020)
The company has started FY21 with strong revenue growth of 161 per cent until 27 August.
On 4 September 2020, TPW closed the day's trade at AUD 9.210, down by 7.808 per cent. The company has a market cap of AUD 1.2 billion and its stock has delivered a return of more than 520 per cent in the last one-year period.
Also read: Can You Be a Millionaire by Investing in Small-cap stocks? Look at Four Small-Cap Stocks
