ASOS said it achieved total group revenues up 21% to almost £1.6bn in the six months to the end of February 2020 as it announced a share placing to shore up its cash position.
The online fashion giant said retail sales were also up 21% at £1.55bn with UK sales up 20% to £577.1m and international sales up 22% to £974.3m. It also achieve record profit before tax of £30.1m, up 653% on the prior year’s £4m figure.
Total orders placed during the period hit 41.1m, up 19% year on year and the group appears to have put its previous international warehousing woes behind it, saying it achieved “robust operational performance across all distribution centres”.
In the most recent three weeks, however, sales have slumped by c.20%-25% as a result of the global COVID-19 crisis. This would appear to be a better performance than the fashion market in general where UK demand is said to have slumped 40% since the crisis began.
ASOS said that the pattern of sales drop in each market was following a similar pattern of “demand shock before impact partially moderates”. It said its sourcing from China had only been moderately affected while it continued to monitor impact from Europe.
Chief executive Nick Beighton said the performance had been “better than expected” adding: “Along with other businesses, we have been significantly impacted by the COVID-19 outbreak. Our first priority was to quickly put in place the necessary measures to ensure the health and wellbeing of our people.
“I have been extremely impressed with the pace of change and the flexibility our teams have shown in adopting these new ways of working. I’d like to thank them all for the way they have responded.
“Since then, we have been focused on keeping our business delivering for customers whilst implementing a series of actions to mitigate the sales impact we have been experiencing. At the same time we have been working to strengthen our financial position, including reaching agreement with our lenders to provide us with additional short-term financial flexibility.”
Earlier today the company announced it was considering a share placing to raise cash, though it was confident it had significant liquidity through its existing £350m revolving credit facility to ride out the crisis.
It and has now confirmed that the placing will be of up to c.18.8% of issued share capital and that it was also in discussions to secure a £60m-£80m 12-month extension to its revolving credit facility.
In addition the company has taken a number of measures to protect its position such as using government support in the form of payment deferrals and job retention schemes. It has also adjusted the intake of product to match “demand profile” and has reduced discretionary spend and CAPEX.
“The ASOS business model provides us with significant resilience and we are encouraged to have seen, across our markets, that where consumers are in lockdown, ASOS continues to be an important part of their lives. We have a global platform with the capacity and capability to drive our future growth as demand returns and against that backdrop we are looking to raise incremental equity capital to ensure we have sufficient resources to capitalise on the future whatever it may hold.
“The COVID crisis is clearly going to continue to be tough for everyone and the short-term outlook remains highly uncertain, but the measures we have taken ensure we are able to be clearly focussed on making sure that ASOS emerges as a stronger and better business,” Beighton added.
ASOS has remained operation, albeit at a reduced capacity, since the crisis began as it needed to reduce staffing at its warehouse to comply with social distancing requirements. The ability to keep trading puts it at an advantage over traditional retail rivals who have been obliged to close all of their physical stores and operate at a reduced capacity online.
Analysts said the move to raise cash, while not strictly necessary, was prudent. “ASOS isn’t in any form of trouble, but it wants to ensure that it comes out of the otherside of the coronavirus crisis is a strengthened position. The fact is no-one knows how long the lock down will go on for,” said Nigel Frith, a senior market analyst at www.asktraders.com.
“Whilst ASOS is still fulfilling orders, demand has dropped. Furthermore, any problems with the GMB union concerning social distancing could put a temporary halt to orders being dispatched.
“Given the uncertainties surrounding the coronavirus outbreak and its potential economic impact the move by ASOS to issue more equity and extend its debt facility is being viewed as a prudent. As a result, the share price soared following the announcement,” Frith added.
Shares closed today up almost 34% at 1,559.5p.