Thursday 29 September 2016

ASOS beats expectations with strong sales growth

Published 12/07/2016 | 08:14

Asos's recent profits dipped after a warehouse fire and continued investment in IT - but UK sales are still up 27pc and overall revenue grew 14pc to £550.5m
Asos's recent profits dipped after a warehouse fire and continued investment in IT - but UK sales are still up 27pc and overall revenue grew 14pc to £550.5m

British online fashion retailer ASOS on Tuesday forecast a full-year sales performance at the upper end of guidance after reporting a better-than-expected sales growth.

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Established in 2000 for fashion-conscious twentysomethings, ASOS was an early e-commerce success story, but is seeing growing competition from the likes of Germany's Zalando and British rival Boohoo, as well as from traditional store-based chains improving their online offerings.

The firm said total retail sales rose 30pc to £500.5m ($654.1m) in the four months to June 30.

That compares to analysts' average forecast of growth of 22.9pc and 21pc in the first half of its 2015-16 financial year.

UK sales rose 28pc, while international sales increased 31pc with sales growth acceleration across the US, European Union and Rest of World segments.

"We now anticipate full-year sales growth at the upper end of the 20-25pc (guided) range," said Chief Executive Nick Beighton.

"We remain confident in delivering current market pretax profit expectations for the year."

Retail gross margin for the period fell 180 basis points, in line with guidance and reflecting price cuts. Full-year guidance of an up to 50 basis points decline was maintained.

With 59pc of ASOS' sales generated from outside of the UK the firm is insulated from any downturn in demand in its home market in the wake of Britain's vote to leave the European Union.

The depreciation of sterling versus the dollar and euro post the Brexit vote also allows ASOS to reduce prices and drive sales in its international markets.

Shares in ASOS, which listed at 20 pence in 2001, have increased 42pc over the last six months and closed at 4,301 pence on Monday, valuing the business at £3.6bn.

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