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ASOS says full-year profits to be at top end of expectations

The online retailer benefitted from investments in product and marketing, with UK sales jumping 36% amid renewed coronavirus restrictions

ASOS PLC - ASOS says full-year profits to be at top end of expectations

ASOS PLC (LON:ASC) has said its full-year profit before tax is likely to be at the top end of market expectations after trading in the four months to December 31, 2020, topped forecasts.

The online retailer said that revenue growth in the period was driven by investment in product, pricing and marketing and stronger than anticipated consumer demand.

READ: ASOS to create 2,000 jobs at new £90mln Staffordshire warehouse

It also benefited from customers returning fewer items amid renewed social restrictions in the period, with coronavirus (COVID-19) delivering a profit boost of at least £40mln in the first half.

In the four months to December 31, 2020, ASOS said total group revenue surged by 23% to £1.3bn, with UK retail sales up 36% and international sales up 16%.

The fashion firm said the good UK numbers were helped by restrictions on non-essential retail stores through the peak period, while it kept momentum up in the US and the EU despite shops there being allowed to stay open.

The active customer base increased by 1.1mln to 24.5mln, the AIM-listed firm said, with growth in new users offsetting fewer occasion-led purchases.

Gross margin dropped by 0.9% reflecting continued 'lockdown' category product mix, investment into customer acquisition and increased freight costs due to COVID-19 disruption.

Full-year capital expenditure guidance was increased by £20mln to £190mln reflecting investment into US automation, while the half-year is expected to end with strong net cash and balance sheet.

"Even though fashion demand in the market may have waned overall but it’s harnessed its savvy marketing and social media prowess and invested in persuading more shoppers to turn their bedrooms into fitting rooms," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"The pandemic may have wreaked devastation on retailers with a large brick and mortar footprint, but it’s given ASOS, with its highly flexible e-commerce platform, another big shot of success."

Shares rose 1% to 5,244.76p on Wednesday morning.

--Adds analyst comment, shares--

Quick facts: ASOS PLC

Price: 4836 GBX

AIM:ASC
Market: AIM
Market Cap: £4.83 billion
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