Asos continuing to deliver the goods
● But full-year sales growth likely to be at lower end of target range
Online fashion darling Asos has warned that its full-year growth will be at the “lower end” of market hopes after it delivered another double-digit jump in sales.
The firm, whose name stands for As Seen On Screen, said its group revenues grew by 22 per cent to £823.9 million in the four months to the end of June.
In a trading update, the group noted that UK retail sales were up 23 per cent to £288m, while sales in the EU rose 31 per cent to £257.4m. In the US, sales increased 15 per cent, from £94.4m to £108.1m.
Asos, which aims its products at twenty-somethings, expects its profit before tax to be in line with consensus forecasts for the year. It added that its retail gross margin was ahead of plan.
In its forward guidance, the firm said that its 2018 sales growth would likely be “towards the lower end” of its 25-30 per cent range.
Chief executive Nick Beighton told investors: “I am pleased with the way the business has traded over the last four months and we are on
0 The online fashion group aims its products at twentysomethings
NICK BEIGHTON, CEO
track with our plans for the year.
“We delivered good sales growth, particularly in the Uk,better-than-plannedgross margin alongside significant progress on our infrastructure investments.”
Nick Bubb, independent retailing analyst and consultant, noted: “The update for the four months to end June was expected to deliver circa 25 per cent sales growth, but the outcome is 22 per cent (21 per cent at constant currency), albeit with the UK delivering impressive +23 per cent, and the company has said that fullyear overall sales growth in year-end August is likely to be at the lower end of the guided 25-30 per cent range.
“However, margins are fine and full-year profit before tax is expected to be in line with the consensus of £101 million.”
Numis analyst Andrew Wade, who has a “buy” recommendation on the shares, said: “Asos has reported a mixed trading update, with overall profit expectations unchanged. Revenue growth marginally light of expectations has been offset by a strong trading performance from the UK, an upgrade to gross margin guidance and positive comments on the start to [the current period of trading].
“[We] believe that Asos’ outstanding customer proposition and significant investments are supporting and driving a vast long-term profitable growth opportunity.”
The update comes after Asos announced recently that Scots-born businessman Adam Crozier would become its next chairman.
Crozier, who hails from the Isle of Bute, will begin his role on 29 November, succeeding fellow Scotsman Brian Mcbride, who was head of the board for six years.
Crozier has been chairman of Whitbread, the owner of Costa Coffee and Premier Inn, since February and also serves as a director at Vue International cinema group. He was chief executive of the Royal Mail for seven years and more recently headed up ITV, leaving in June last year.
On being named Asos chair, he said: “The Asos story is truly impressive and I am tremendously excited to become part of it. I’m greatly looking forward to working with the team that is building a global powerhouse in online fashion.”
“I am pleased with the way the business has traded over the last four months and we are on track with our plans for the year”