Online retail giant Asos getting back on track after sales blip

Online fashion retailer Asos will this week try to reassure investors that it has recaptured its momentum after a sales blip at the start of lockdown.

Asos, whose name is short for As Seen On Screen, is poised to release full-year results this week and analysts and shareholders will also look to chief executive Nick Beighton for any potential guidance for the new financial year.

The firm – whose name is short for As Seen On Screen – now expects sales to be up by 17 per cent to 19 per cent year-on-year after a wobbly start, when UK volumes fell sharply in the first three weeks of spring’s nationwide lockdown.

The group is poised to release full-year results this week and analysts and shareholders will also look to chief executive Nick Beighton for any potential guidance for the new financial year.

Russ Mould, investment director at AJ Bell, said pre-tax profit for the year being reported would be between £130 million and £150m, which compares to £33m a year ago, when Asos dished out profit warnings amid heavy investment in IT, operational issues at its warehouses and aggressive discounting by competitors.

He added: “The company has focused on costs and capital investment and will also have benefited from lower returns during lockdown, like its rival Boohoo, so those trends may have helped to stop the rot.”

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, noted: “Asos surprised the market back in August, after it upgraded full-year expectations. Lower return rates and strong post-lockdown trading means pre-tax profit should be £130m-£150m.

“However, margins continue to trouble us. Operating margins have really struggled in recent years, but fewer returns in lockdown and beyond means we could see some significant improvement here.

“On top of this, we’re encouraged by the reduced promotional activity, which should also be good news on the margin front.”

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