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ASOS to pay back furlough money amid strong profit expectations

In the four months to June 30, revenue advanced 9% to £1bn as customers turned to 'lockdown' products

ASOS PLC - ASOS to pay back furlough money over strong profit expectations

ASOS PLC (LON:ASC) said it is paying furlough money back to the government as it anticipates “substantial” profit growth for the year to August 31.

In the four months to June 30, revenue advanced 9% to £1bn compared to last year, driven by a 15% jump in the international division with a 1% dip in the UK.

READ: Credit Suisse revises up target prices for ASOS, B&M, Next but demand may be subdued during the summer

The 20-25% slump in sales seen at the onset of the crisis was recovered by increasing warehouse capacity, new customer acquisition and underlying improvement in demand as people turned to ‘lockdown’ products such as casualwear, activewear and beauty products.

The AIM-listed giant said customer demand for key 'lockdown' category items outstripped supply and it will continue to focus on this mix throughout the winter as well, turning to occasionwear once people are allowed to socialise more.

The online retailer continues to expand capacity at its warehouses, though it remains cautious of “the significant uncertainty ahead, particularly as the medium-term economic consequences start to emerge for our 20-something customers”.

"With COVID-19 increasing the importance of the online channel for store-based retailers, the fight to get the incremental customer could actually get tougher from here which may require further marketing/ gross margin investment," analysts at Liberum commented, reiterating the 'sell' recommendation.

Shares rose 2% to 3,452.43p early on Wednesday.

--Adds analyst comment, shares--

Quick facts: ASOS PLC

Price: 3453 GBX

AIM:ASC
Market: AIM
Market Cap: £3.44 billion
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