British online fashion retailer ASOS expects to benefit from the sharp depreciation of sterling versus the US dollar in the wake of the UK's decision to leave the European Union, its boss said on Tuesday.
With over half of ASOS' sales generated from outside of the UK the firm is also insulated from any downturn in demand in its home market following the Brexit vote.
On Tuesday the euro buys £1.19.
Britain’s shock vote last month to quit the EU has stunned financial markets, with the pound bearing the brunt of the early violent reaction, tumbling to a 31-year low against the dollar.
"Our sales prices which are denominated off sterling now look cheaper to the U.S. customer and look cheaper to the European customer," Chief Executive Nick Beighton told reporters on Tuesday.
“What we think that will give us is a greater sales trajectory,” he said.
Beighton was speaking after ASOS reported better than expected second half sales, sending its shares up to 6.5 per cent higher.
He said the anticipated sales uplift would more than offset the negative impact of higher sourcing costs.
The basic raw material of many of ASOS’ garments is cotton, which is denominated largely in dollars.
Beighton said it was too early to predict what the long term consequences of Brexit would be for the UK and ASOS.
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 per cent to £500.5 million in the four months to June 30th.
That was ahead of analysts’ average forecast of growth of 22.9 per cent and growth of 21 percent in the first half of its 2015-16 financial year.
UK sales rose 28 per cent, while international sales increased 31 percent with sales growth acceleration across the US, European Union and Rest of World segments.
ASOS now anticipates sales growth for its full 2015-16 year at the upper end of the 20-25 per cent range previously guided and is confident of delivering analysts’ pre-tax profit expectation of £62 million on a continuing business basis.