Easing of social restrictions expected to have benefited online fashion darling Asos
Online fashion giant Asos is expected to have capitalised on the easing of socialising restrictions when it updates on recent trading this week.
The firm, whose name stands for As Seen On Screen, has remained flexible in responding to demands for lockdown products, as sales of formal wear and outfits for social events remained low. Instead, shoppers turned to “activewear” and “casualwear” categories.
But that is likely to have changed somewhat over the past few weeks amid the easing of restrictions, allowing the group to capitalise on “event-led” products.
Half-year results in April showed that overall revenues rose by a quarter to almost £2 billion, with strong growth in every region. Investors will be keen to see if those stellar growth rates have been maintained when the firm releases a trading update on Thursday.
Sophie Lund-Yates, equity analyst at financial services group Hargreaves Lansdown, said: “The group has warned the lockdown tailwind is expected to taper as tourism and hospitality restrictions ease – we could find out to what extent this trend is playing out.
“As it’s a trading statement, we’re unlikely to get much profit detail. So it’ll be important to look at sales trends closely instead, especially in North America. This is a core growth opportunity for Asos, with the UK market now mature.
“Revenue in the region rose 16 per cent at the half year despite a heavier reliance on occasion wear which fell out of favour in peak lockdown.
“We wonder if things could be looking brighter, now social events are finding their way back into diaries, or if the fact people are busier will mean fewer sales overall.”
The interim results showed that pre-tax profits had leapt 253 per cent to £106.4 million in the six months to the end of February.
Lund-Yates added: “We’ll be looking out for any commentary on full-year expectations. Capital expenditure is due to come in at around £190m, and the second half should be cumulatively cash-generative.”
The integration of the Topshop brands, which Asos bought out of administration earlier this year, is also progressing to plan, the firm noted in April.
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