Britain’s ASOS sees full-year sales growth at upper end of guidance

By: | Published: July 12, 2016 1:31 PM

Established in 2000 for fashion-conscious twentysomethings, ASOS was an early e-commerce success story, but is seeing growing competition from the likes of Germany's Zalando and British rival Boohoo, as well as from traditional store-based chains improving their online offerings.

asos-reu-LUK sales rose 28 percent, while international sales increased 31 percent with sales growth acceleration across the U.S., European Union and Rest of World segments. (Reuters)

British online fashion retailer ASOS on Tuesday forecast a full-year sales performance at the upper end of guidance after reporting a better-than-expected sales growth.

Established in 2000 for fashion-conscious twentysomethings, ASOS was an early e-commerce success story, but is seeing growing competition from the likes of Germany’s Zalando and British rival Boohoo, as well as from traditional store-based chains improving their online offerings.

The firm said total retail sales rose 30 percent to 500.5 million pounds ($654.1 million) in the four months to June 30.

That compares to analysts’ average forecast of growth of 22.9 percent and 21 percent in the first half of its 2015-16 financial year.

UK sales rose 28 percent, while international sales increased 31 percent with sales growth acceleration across the U.S., European Union and Rest of World segments.

“We now anticipate full-year sales growth at the upper end of the 20-25 percent (guided) range,” said Chief Executive Nick Beighton.

“We remain confident in delivering current market pretax profit expectations for the year.”

Retail gross margin for the period fell 180 basis points, in line with guidance and reflecting price cuts. Full-year guidance of an up to 50 basis points decline was maintained.

With 59 percent of ASOS’ sales generated from outside of the UK the firm is insulated from any downturn in demand in its home market in the wake of Britain’s vote to leave the European Union.

The depreciation of sterling versus the dollar and euro post the Brexit vote also allows ASOS to reduce prices and drive sales in its international markets.

Shares in ASOS, which listed at 20 pence in 2001, have increased 42 percent over the last six months and closed at 4,301 pence on Monday, valuing the business at 3.6 billion pounds.

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