Asos beats forecasts thanks to US surge and price investment

Half-year sales and profits from Asos were comfortably stronger than forecast as the online fashion retailer said its pricing investments and high flow of new clothes styles has improved the proportion of full price sales and reduced its reliance on promotions.

For the six months to 29 February, the company, which is still listed on AIM despite its £3bn market cap, lifted revenues 21% to £667.3m compared to the the previous year, beating the consensus forecast of £662.8m.

With UK retail sales up 25% and international by 18% or 24% at constant currency rates, this demonstrated "improving momentum" in the business, said chief executive Nick Beighton, who took over when founder Nick Robertson stepped down in September.

European sales were up 23% thanks but were far eclipsed by US retail sales growing 41%, helped by currency effects and an increased range of locally relevant brands together with group-wide investment in price and a new membership scheme.

March's new US import duty thresholds could provide between £6m and £8m of benefit in the second half of the financial year which management plan to fully reinvest back into the US customer through price and proposition improvements.

For the group, profit before tax increased 18% to £21.2m, beating PBT consensus of £20.1m.

UK margins were expanded by 170 basis points with investment in automation at the Barnsley warehouse starting to pay off as costs as a percentage of sales were trimmed.

However, reported earnings per share rose 4% to 18.3p after being hit by a 7.6% percentage point increase in the effective tax rate, as this month's decision to discontinue Asos' local China operation means that the losses accrued there are no longer held as a deferred tax asset and consequently will not be able to offset against future profits.

Cash in the bank ended the half in a robust position of £135.9m, up from £119.2m in six months.

But Beighton said he was most encouraged by the 17% growth in active customer numbers to 10.9m, with benefited from the investment in technology and logistics delivering 21% growth in visits to the websites and growth in average order frequency, basket value and conversion.

As for the full year, he added: "I'm pleased to confirm that we are on track to achieve our previously stated sales and margin guidance for the full year."

Shares in Asos hit an eight-month high above 3,600p in early trade before easing off to 3,547p, a rise of 4% by 0840 BST on Tuesday.