Asos has said it expects to smash growth forecasts for the year after group sales hiked 10 per cent during lockdown as customers around the world were forced to shop online.
The British retailer said costs cuts and “rigorous” business management helped offset the slump in demand for outerwear and party gear, as customers stayed at home during lockdown. Asos also upped warehouse capacity to accommodate for a new “lockdown” product mix during the pandemic.
Group sales rose 10 per cent to £983.3m in the four months to 30 June, after the fashion firm’s customer base grew 16 per cent to 23m year-on-year.
Total group revenue climbed 10 per cent to £1.1bn from £919.8m in the same period in 2019.
UK sales dipped one per cent to £329.2m during the quarter, but the fashion retailer saw a spike in international demand.
EU retail sales jumped 20 per cent to £328m from £269m in the same period last year, as Asos said it was experiencing a “strong recovery” in the EU and other overseas markets since lockdown measures eased.
International retail sales climbed 17 per cent to £654.1m, after the group saw particularly strong growth in new international customers during the quarter.
Why it’s interesting
Asos said it expects sales for 2020 to be towards the top end of market expectations, despite material Covid-19 costs. The fashion retailer nodded towards its removal of non-strategic costs for its success during the coronavirus crisis.
Asos said it now has a strong net cash position, and does not foresee a material inventory risk or write off requirement relating to Covid-19.
The retailer wound down promotional and marketing activity during lockdown to accommodate for reduced capacity in its warehouses as a result of social distancing measures.
It also thinned its occasion wear supply and refocused its product mix towards greater customer demand for “lockdown” gear, including loungewear and beauty products which have now outstripped supply.
The e-commerce brand saw its strongest ever month for social media engagements during lockdown, after notching more than 9m likes, comments and shares in May — up more than 90 per cent month-on-month.
What Nick Beighton said
Nick Beighton, chief executive of Asos, said:
“This has been a tough time for all businesses, but we have remained focused on doing the right thing for our people and our customers and making sure that we emerge from the current crisis as a stronger and better organisation. I am particularly proud of the resilience, flexibility and creativity the Asos team and our business partners have shown.
“Our performance in [the third quarter] shows that we are delivering against this aim despite the tough economic and social backdrop. We have learnt a lot and adapted quickly, and Asos finishes the period with improved underlying profitability.
“While we remain cautious about the consumer impact of Covid-19 looking forward, we are on track to deliver strong year-on-year profit growth and to return to positive free cash flow for the full-year .”