Online fashion firm Asos to have cashed in on high street shutdown

Asos is set to continue its recent stellar spell with a surge in earnings and sales as further lockdown restrictions have kept its shoppers from returning to UK high streets.

Asos, or As Seen On Screen, has been a major online retail success story for the UK.

Investors will be hopeful that the online retailer can continue to exceed expectations, having posted earnings ahead of its forecasts in six of its past eight financial results.

The group has seen sales grow during the pandemic as its customers have shunned party dresses in favour of leisurewear.

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Asos is due to update shareholders and investors on its trading performance for the six months to February in its half-year update this week.

Revenues are expected to jump by 22 per cent to around £1.95 billion over the period amid a continued increase in customer numbers. It is also expected to unveil a 135 per cent jump in underlying earnings per share as a result.

Analysts at JP Morgan have said they expect Asos to deliver pre-tax profits of £86 million for the period but warned that it could face an impact of around £2m from post-Brexit trade tariffs.

Nevertheless, the analysts also said the retailer could expect to benefit from at least £40m in savings, primarily driven by lower returns from customers keen to avoid lengthy Post Office queues.

Shares have steadily gained in recent months as trading conditions have continued to stay positive for Asos.

Despite the imminent reopening of high street fashion stores, higher consumer savings and the potential permanent shift by some customers online over the year are still reasons for optimism.

Although its shares are some way below its £80 all-time peak from 2018, they are closing in on a 12-month high and could push higher if bosses lay out an optimistic outlook on Thursday.

Shareholders will also be keen to hear about how its former Arcadia brands – Topshop, Topman, Miss Selfridge and HIIT – have performed since they were bought in a £265m rescue deal at the start of February.

In a note to potential investors, JP Morgan said: “With an improved operational grip now clearly demonstrated, we expect the focus to now shift firmly back to growth opportunities for Asos, including from the recent Topshop acquisition.”

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