Asos upgrades profit forecast as demand remains strong
Online fashion retailer says expected increase in returns has not materialised
Asos said returns were not as high as anticipated. Photograph: Suzanne Plunkett/Reuters
British online fashion retailer Asos has forecast full-year sales and profit significantly ahead of market expectations, saying it has benefited from stronger than anticipated underlying demand and fewer products being returned by shoppers.
Shares in Asos were up 8.5 per cent early on Wednesday, extending gains in 2020 to 36 per cent after it said revenue growth for 2019-2020 was now expected to be 17-19 per cent.
It forecast pretax profit of about £130 million-£150 million (€144.4 million-€166.6 million), up from 33.1 million in 2018-2019.
Asos, whose fast fashions are popular with shoppers in their 20s, said it had expected to see return levels normalise once lockdown measures eased and customers were able to ship returns and felt more comfortable doing so.
However, it said returns were not increasing at the rate it had anticipated due to strong demand during the lockdown for activewear and a shift to more intentional purchasing across all ranges.
German online fashion retailer Zalando said on Tuesday it had also benefited from a decline in returns, though it assumes the fall will be temporary.
“Looking forward, the consumer and economic outlook remains uncertain and it is unclear how long the current favourable shopping behaviour will persist,” Asos said.
Last month Asos said it would repay the money it claimed under Britain’s scheme to furlough workers during the crisis.
In April it raised £247 million in new equity to shore up its finances. – Reuters