Asos reports record FY profit and revenue, lifts sales growth guidance

Online fashion retailer Asos reported record full-year profit and sales on Tuesday as it bumped up its full-year sales growth forecast.

In the year to 31 August, pre-tax profit surged 145% to £80m on revenue of £1.9bn, up 33% on the previous year. The company said sales growth was again driven by strong product, proposition improvements and further price investments across major markets. In addition, the continuing FX tailwind enabled reinvestment at a faster rate than initially planned.

UK retail sales rose 16% to £698.2m while international sales were up 47% to £1.2bn.

Meanwhile, the retail gross margin was up 10 basis points to 48.6% as price investments in the US, Europe and some Rest of World territories were offset by a higher full price mix.

Asos also said it has upgraded its outlook for sales growth in the current financial year. It now expects full-year growth of around 25% to 30%, while medium-term sales growth guidance was left unchanged at around 20% to 25%.

The company’s websites attracted 135.7m visits in August 2017 versus 117.5m in August 2016 and as at 31 August, it had 15.4m active customers compared to 12.4m on 31 August 2016.

Chief executive officer Nick Beighton said: "It's been a great year for Asos, with continued growth in sales and profits. Our international performance was excellent, as we reinvested FX tailwinds and benefitted from our continually improving customer proposition. In a competitive UK market, we achieved strong full price performance whilst further increasing market share.

“At the same time, we ramped up our investment in building the increasingly strong and differentiated Asos proposition. Our new agile technology platform is allowing us to accelerate our pace of innovation with great benefits for our customers, including new payment methods and additional language sites to come. The investments we are making will see us add 1,000 new heads and will lay the foundations for a circa 60% increase in unit capacity and circa £4 billion of net sales.”

Numis said pre-tax profit was slightly ahead of its expectation of £78m and a consensus forecast of £79.3m.

“Asos remains a uniquely positioned operator with a vast long-term global growth runway and increasing momentum,” said the brokerage, which has a ‘buy’ rating on the stock.

At 0935 BST, the shares were up 1% to 5,754p.