Asos chief confident of full-year targets despite US supply issue

The CEO of online fashion retailer Asos said today (19 March) that the business is confident of meeting sales and profit guidance despite some challenges it faces outside its home UK market.

Commenting as part of a half-year trading update, which showed that group revenue was up by 14% to £1.31 billion in the six months to 28 February, CEO Nick Beighton said the group was on course to deliver stronger growth in the second half of the financial year.

"Group sales over the period increased by 13% and retail gross margin improved by 40bps,” he explained.

“We continued to outperform in the UK with sales growth of 14%. Sales in Europe were up 12%, although France and Germany, our two largest markets, continue to be challenging.”

At the end of 2018, Asos shocked the market when it reduced its full-year guidance on the back of a relatively sluggish November trading in the UK.

Today, Beighton also provided more details about Asos’s performance in the US, describing the £161.6 million sales there for the six-month period as “behind our plans”.

“As our Atlanta warehouse went fully online, demand far exceeded our expectations,” he noted.

“Whilst very encouraging for the longer term, this caused a significant short-term dispatch backlog which we have now cleared. These delayed shipments will be recognised in P3 [trading period three], and US trading is now regaining momentum.”

He added that the company’s Rest of the World segment, which includes Australia, Asian markets and others, returned to “good growth of 20% after a disappointing Q1”. It was up 8% year on year to £236 million.

Asos said it will increase investment in price and marketing in the second half, particularly in France and Germany. The company is set to announce interim results on 10 April 2019.

For the full year, Asos expects sales growth of 15%, a reduction in retail gross margin of circa 150bps, and EBIT margin of around 2%.

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