ASOS predicts £40m lockdown profit boost as sales jump

Online young fashion giant ASOS has said it expects the impact of the pandemic to provide a £40m profit boost which will help drive it towards the top of its annual targets.

The company told investors that strong lockdown demand meant retail sales rose by 23% to £1.32bn for the four-month period to 31 December.

Asos said half-year profits will be buoyed by “at least £40 million” as it benefited from lower customer returns.

However, it also said it expects to be hit with £15m in Brexit tariff costs due to Country of Origin rules affecting some of its goods.

The retailer, which last week announced a new £90m distribution site creating 2,000 jobs, said its customer base increased by 1.1m over the period.

It added that, while overall demand in the market is “supressed”, it remains “more resilient than our initial expectations”.

The group hailed “exceptional” growth in the UK as it also benefited from the closure of non-essential retailers, such as high street fashion stores, moving some customer demand online.

ASOS CEO Nick Beighton said: “We are really pleased with the strong performance we have delivered, which is testament to both the strength of our multi-brand model and the hard work of our people.

“We have continued to execute well and deliver for our customers, whilst investing into growing our business and driving further efficiency through a strong operational grip.

“Looking forward, given the uncertainty associated with the virus and the impact on customers’ lives, our cautious outlook for the second half of the year remains unchanged.

“However, the strength of our performance gives us confidence in our continued progress towards capturing the global opportunity ahead.”

Richard Lim, chief executive of Retail Economics, said: “These are mightily impressive results in an extremely difficult part of the market.

“Lockdowns, fewer opportunities to mix socially and cancelled Christmas parties have decimated the demand for new outfits this year.

“But what consumers did spend was focused towards casual wear and channelled online, with the retailer well positioned to leverage this opportunity.”

ASOS shares were 3.5% higher at 5,376p in early trading on Wednesday.