Asos enjoys summer bloom as sales approach top of forecasts
Demand for summer dresses and festival wear helped business boom for online fashion retailer Asos, which said annual sales would be at the top of forecasts.
The company, whose customers include Michelle Obama and Samantha Cameron, said retail sales for the four months to 30 June increased 20%, or 24% allowing for currency movements.
Sales in Britain rose 27% and international sales, worth about 60% of the total, were up 16%, or 23% in constant currencies. For the year that ends on 31 August, sales will be at the high end of Asos’s previous guidance of 15% to 20%.
Nick Robertson, Asos’s chief executive, said top-selling items included sequinned mini skirts, structured sun dresses, dungarees and boots for festivals bought by customers in their 20s.
“Festivals and dresses for holidays were really, really strong for us,” he said.
In the UK, new brands such as Misguided and Boohoo helped increase sales. The company also extended its cutoff time for next-day delivery to midnight from 10pm and simplified its smartphone app.
Asos’s strong trading is a turnaround from last year when three profit warnings in six months rocked its position as a stock market favourite valued at £6bn.
The company, which sells in about 200 countries, blamed weak international sales caused by the strong pound making goods expensive and it also suffered a fire at its main depot in Barnsley.
“A year ago our UK performance was OK but where we were struggling was international. That was with the currency working against us and we were unable back then to change our prices in international territories.”
Asos installed software so it could adjust prices quickly to compete in particular countries. It has cut prices but better stock control and strong full-price sales have helped keep gross profit margins steady when analysts had expected a sharp fall.
High-street fashion retailers suffered slow spring sales because of cold weather, prompting many to launch their sales early. Robertson said the unseasonal weather had little effect on Asos.
“We are very global and we are not reliant on the UK,” he said. The company is on track to reach its target of £2.5bn annual sales soon, Robertson said without being more specific.
Andrew Wade, an analyst at stockbroker Numis, increased his estimate for annual pre-tax profit to £46.5m from £45.8m. Profit last year was £43.9m.
Wade said: “We are seeing clear positive results and a business which has regained its momentum.”
Asos shares, which were valued at £70 in February 2014, were down 2.5% at £37.45 in lunchtime trading. After plunging in 2014, they have gained about 50% this year.