Asos reported a quadrupling in full-year profit following a spike in online shopping during the coronavirus pandemic, but warned on the outlook for consumer spending among its young customer base.
The fashion ecommerce giant reported profit before tax of £142.1m for the year to 31 August, up from £33.1m the year before.
Sales rose 19 per cent to £3.26bn in the period, as Asos served 23.4 million customers – an increase of 3.1 million.
However shares in the AIM-listed company fell after it said it was cautious on the outlook for consumer demand whilst the economic prospects and lifestyles of young people remain disrupted.
“We are cautious on the outlook for consumer demand, and will remain so until lifestyles and financial stability for our 20-something customers start to normalise,” the company said.
Asos shares fell as much as 7.54 per cent following the warning.
“After a record first half which saw us make progress in addressing the performance issues of the previous financial year, the second half will always be defined by our response to Covid-19,” said chief executive Nick Beighton.
“Whilst life for our 20-something customers is unlikely to return to normal for quite some time, ASOS will continue to engage, respond and adapt as one of the few truly global leaders in online fashion retail,” he added.
“Recent results from Boohoo and Zalando suggested that Asos would deliver a solid set of annual figures – and the company has duly delivered,” said John Moore, senior investment manager at Brewin Dolphin.
“The long-term economic impact of the pandemic on its core customer base is yet to be seen, providing a significant uncertainty for the months ahead – but Asos has prepared for this by trimming costs and investing in its business,” he added.
The online retail giant said it had made a “solid” start to the new financial year and was in a good position for the key Christmas trading period.
Beighton said the company was expecting a highly promotional trading period in the run-up to Christmas this year.
“We’re… expecting it to be a very promotional period from now on in, starting at Halloween,” he told Reuters.
The chief executive also said that Asos was assuming Britain would not reach a trade deal with the European Union, and was working on the basis of a no deal outcome.
“If there is a Brexit deal with tariffs we would have to suck up a substantial amount of operating cost,” he said.
Shares in Asos have doubled over the past year, leaving it with a market capitalisation of £5.4bn at the end of trading yesterday – more than double that of Marks & Spencer, the UK’s largest clothing retailer by sales.