ASOS sales to grow by 17%-19% as trading ahead of expectations
ASOS expects sales to be up by 17% to 19% in the current financial year, which is "significantly" ahead of expectations.
In a pre-close trading statement this morning, the online young fashion giant also said that it expected to deliver profits before tax in the region of £130m-£150m.
The improved results are down to better than expected demand and a "strong operational performance" as it continues to focus on "trading dynamically and managing the business rigorously" in the face of the COVID-19 pandemic.
ASOS also said that it had witnessed a better than expected returns profile as customers had returned fewer items since lockdown began at the end of March.
"In part this reflects customer demand for ‘lockdown’ categories, such as activewear and face + body. However, rates have been further suppressed below estimated levels by a prolonged shift in customer behaviour towards more deliberate purchasing across all product categories, even when sales momentum has improved," its statement said.
ASOS sounded a note of caution, however, saying that it was unable to predict how long the favourable trading conditions would persist.
"We are providing updated expectations for the current year reflective of this uncertainty. The recent trading dynamics will deliver FY20 sales and PBT ahead of market expectations and further support strong underlying cash generation this year. However, the extent of this outperformance and any impact beyond this financial year will be driven by how customer shopping behaviour normalises," it said.
"The second half has been a period of tremendous change for ASOS, we have made real progress and shown resilience through the period and are exiting the year in a strong position. We have a robust balance sheet, with a differentiated product offer and global infrastructure to leverage. Against this backdrop we have increased confidence that ASOS will continue to progress as one of the few truly global leaders in fashion retail," it added.
Liberum analyst Adam Tomlinson noted that news comes a day after Zalando reported a high single-digit percentage decrease in return rates.
“A key driver of (ASOS’s) better profit outturn for the year is that return rates are better than expected, which is consistent with what Zalando said yesterday,” he said.
He added: “While Zalando expects return rates to revert back to pre-Covid levels, ASOS are not seeing this dynamic play out at the rate they were expecting.”
Last month ASOS reported that it had achieved a 10% increase in group sales to £1.014bn in the four months to 30 June.