Asos in­vestors cheer lower cloth­ing re­turns as rev­enue up by fifth

The Daily Telegraph - Business - - Business - By Si­mon Foy and Laura Onita

SHOP­PERS con­tin­ued to snap up clothes from on­line seller Asos even after stores were re­opened by its bricks and mor­tar ri­vals, trig­ger­ing a jump in sales and prof­its.

The surg­ing de­mand could pro­pel an­nual pre-tax prof­its at the fast-fash­ion firm to £150m, bosses said, driven by rev­enues al­most a fifth higher than in 2019. Asos was boosted by cus­tomers send­ing back fewer clothes than ex­pected. It said shop­pers are in­creas­ingly mak­ing care­ful de­ci­sions about what they buy, rather than or­der­ing sev­eral dif­fer­ent items to try on and re­turn­ing the ones they do not like. This ap­pears to be a longer-term shift in be­hav­iour than first forecast.

The com­pany said: “We had ex­pected to see un­der­ly­ing re­turns nor­malise once lock­down mea­sures eased and cus­tomers were both able to ship re­turns and felt more com­fort­able do­ing so.

“How­ever … it has be­come ev­i­dent that re­turns are not in­creas­ing at the rate we orig­i­nally an­tic­i­pated.”

The bullish up­date comes after con­sumers bought more sportswear and beauty prod­ucts in lock­down.

Shares jumped 13pc to close at £47.80. They have posted a re­mark­able re­cov­ery since fall­ing to al­most £10 in mid-March as Covid hit. Asos is worth £4.8bn – more than ri­val Boohoo, which has been fend­ing off claims of “sweat­shop” con­di­tions in its sup­ply chain. Boohoo de­nies the al­le­ga­tions.

On­line fash­ion sales have boomed since the be­gin­ning of lock­down to £1.3bn in June from £636m in March, fig­ures from Kan­tar showed. Of­fline fash­ion has lost sig­nif­i­cant ground after bricks and mor­tar branches were forced to shut for al­most three months.

De­spite strik­ing an up­beat tone, Asos warned that the eco­nomic out­look re­mains un­cer­tain.

It said: “The ex­tent of this out­per­for­mance and any im­pact be­yond this fi­nan­cial year will be driven by how cus­tomer shop­ping be­hav­iour nor­malises.” An­a­lysts at Peel Hunt had pre­vi­ously forecast an­nual pre-tax profit of just £69m and said the up­date was ex­tremely im­pres­sive.

They said: “The shares have done well but are likely to chal­lenge our £50 price tar­get in the up­com­ing ses­sions.”

Last week, Asos de­manded greater trans­parency from third-party brands in the wake of a wave of con­cerns over un­eth­i­cal treat­ment of work­ers across the in­dus­try.

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