Asos’ star continues to shine brightly with £80m profit forecast

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Online fashion darling Asos has posted a jump in third-quarter takings, helped by a surge in international sales and price trimming.

The group, which is popular with teenage and twenty-something consumers, yesterday said total sales in the four months to the end of June leapt 32 per cent to £676 million, driven by strong growth in the US and Europe, where revenue rose 38 per cent and 41 per cent respectively.

In the UK, revenues were up by 16 per cent to £234.6m.

The company has previously said, as a net exporter, the slump in the value of the Brexit-battered pound has helped its international sales rocket and allowed it to plough more into price cuts.

Chief executive Nick Beighton said yesterday: “Strong [first-half] sales momentum has continued through the third period supported by our ongoing investment in our customer proposition and in price.

“This good performance has been underpinned by advances across all areas of our business including retail, technology, warehousing, delivery solutions and customer care.

“We remain on track and confident of meeting market expectations and will release our results for the year to 31 August 2017 on 17 October.”

Asos – which stands for “As Seen on Screen” – said it remains on track to notch up full-year pre-tax profit of £79.4m.

The group’s buoyant results come while many other British retailers are facing a torrid time.

John Lewis has warned over a “turbulent and challenging” high street amid cost pressures from the rising inflation and higher costs and a dramatic shift in consumer spending.

Lord Wolfson, the chief executive of Next, has also warned of another tough year ahead as the high street giant grapples with a cooling in consumer demand.

George Salmon, equity analyst at Hargreaves Lansdown, said: “Asos is something of a rarity in the UK retail sector. While weaker sterling and a more frugal consumer give UK-focused rivals sleepless nights, the group’s sizeable overseas sales means its management have no such worries.

“Indeed, the combined size of the EU and US markets means the international growth potential of Asos is vast. The group already has a significant foothold in these markets, and its website and mobile app are attracting more hits every day. The challenge is to keep pace with the steep trajectory of customer demand.”

Shore Capital analyst George Mensah, who has a “buy” recommendation on the shares, noted: “Management has stated that it anticipates full-year sales growth to be towards the upper end of the 30-35 per cent growth corridor, with our forecast for FY2017 revenue growth currently set at 34 per cent.

“Whilst full-year PBT [profit before tax] is anticipated to be in line with consensus expectations, currently at £79.4m (based on the analyst consensus complied by the company), our forecast of £80m remains unchanged.”

Andrew Wade at Numis said: “Leaving our forecasts unchanged today, we retain our positive stance, continuing to believe that Asos’ unique proposition supports a substantial long-term growth opportunity.”