ASOS upgrades sales and profit outlook on strong demand, fewer returns

A model walks on an in-house catwalk at the ASOS headquarters in London April 1, 2014. — Reuters pic
A model walks on an in-house catwalk at the ASOS headquarters in London April 1, 2014. — Reuters pic

LONDON, Aug 12 — British online fashion retailer ASOS forecast full-year sales and profit significantly ahead of market expectations, saying it was benefiting from stronger than anticipated underlying demand and less products being returned by shoppers.

Shares in ASOS were up 8.5 per cent at 0734 GMT today, extending gains in 2020 to 36 per cent after it said revenue growth for its 2019-20 year was now expected to be between 17 per cent and 19 per cent.

It forecast pretax profit in the region of £130 million (RM712 million) to £150 million, up from £33.1 million in 2018-19.

Several British clothing retailers, including Next and Superdry, have recently reported better than expected trading as Britain emerged from coronavirus lockdown.

ASOS, whose fast fashions are popular with shoppers in their twenties, said it had expected to see return levels normalise once lockdown measures eased and customers were able to ship returns and felt more comfortable doing so.

However, it said returns were not increasing at the rate it had anticipated due to strong demand during the lockdown for activewear and a shift to more intentional purchasing across all ranges.

It said this reflected robust demand for “lockdown” categories, such as activewear, and a prolonged shift in customer behaviour towards more intentional purchasing across all ranges.

German online fashion retailer Zalando said yesterday it had also benefitted from a decline in returns, though it assumes the fall will be temporary.

“Looking forward, the consumer and economic outlook remains uncertain and it is unclear how long the current favourable shopping behaviour will persist,” ASOS said.

Last month ASOS said it would repay the money it claimed under Britain’s scheme to furlough workers during the crisis.

In April it raised £247 million in new equity to shore up its finances. — Reuters

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