Asos triples profits as Covid crisis boosts online sales | Asos
Asos has more than tripled first-half profits to a record £106m as the online retailer continues to benefit from the pandemic.
The fashion and beauty seller also said it was likely to make £30m more annual profit than previously anticipated after the pandemic shift towards shopping online, particularly in the UK and most of Europe.
Profits increased 253% year on year to £106.4m in the six months to 28 February, as revenues soared by 24% to nearly £2bn. Asos said it had made £48.5m of profit from what it called the “net Covid tailwind”, which included more sales and fewer returns as shoppers turned to less fitted items, such as hoodies and leggings, and were more careful about what they bought.
Sales growth in the UK was 39%, more the twice the pace of that in Europe, the US and the rest of the world, partly because of differing trading restrictions.
There was strong growth in key “lockdown” clothing categories, including a more than doubling of sales of activewear such as gym leggings and joggers and an 86% rise in sales of casual wear.
The company now expects to benefit from demand for new outfits following the return of events and the reopening of pubs, restaurants and bars. Shoppers have already begun to increase their searches for dresses, for example, in anticipation of going out more.
“We are delighted with our exceptional first-half performance,” said Nick Beighton, the chief executive. “These record results, which include robust growth in sales, customer numbers and profitability, demonstrate the significant progress we have made.”
The number of active customers on Asos rose by 1.5 million to nearly 25 million, which the company said was a good performance given the lockdown had led to fewer “event-led” reasons for people to shop for formal and occasionwear.
The company bought the Topshop and Miss Selfridge brands as well as the HIIT activewear label from Sir Philip Green’s collapsed Arcadia empire for £330m in February, and Beighton said it had been “seamlessly” integrated into Asos.
The company cautioned that these benefits were likely to diminish when restrictions were lifted on the high street retail, hospitality and tourism sectors and consumers had more spending options.
“In the coming months we expect a portion of consumer demand will move back to stores as restrictions are eased throughout our markets, but we expect online penetration to remain structurally higher than pre-Covid-19 levels,” Asos said.
Mat Dunn, the finance director, said shipping costs, which have been driven to five times pre-Covid levels, were unlikely to come down in the short term because of shortages of capacity worldwide, while Brexit had significantly increased the cost and time taken to ship items to and from the rest of Europe.
Beighton said: “Looking ahead, while we are mindful of the short-term uncertainty and potential economic consequences of the continuing pandemic, we are confident in the momentum we have built.”