Asos reports 10% Q3 sales rise with strong overseas contribution

Asos delivered double-digit sales growth in its third quarter, with the strongest performance coming from its overseas markets.

The company reported total sales growth of 10% to £1.014 billion for the four months to the end of June as it recorded steady improvement throughout the period, largely avoiding any disruption from Covid-19 and more recently the fast-fashion supply chain issues that have engulfed rival Boohoo.

The weakest market for Asos was the UK, which suffered a 1% decline in sales to £329.2 million but this was more than offset by the strong performance delivered in international markets that jumped 17% to £654.1 million. Asos also benefited from an active customer base increase of 16% year-on-year to 23 million, again with a notable contribution coming from overseas markets.

Despite the challenging backdrop and the company’s cautious view on the short- to medium-term demand outlook, it predicted full-year profits for 2020 to come in at the top-end of market expectations.

“This has been a tough time for all businesses, but we have remained focused on doing the right thing for our people and our customers and making sure that we emerge from the current crisis as a stronger and better organization,” said Asos CEO Nick Beighton.

“We have learnt a lot and adapted quickly, and Asos finishes the period with improved underlying profitability. While we remain cautious about the consumer impact of Covid-19 looking forward, we are on track to deliver strong year-on-year profit growth and to return to positive free cash flow for the full-year."

Richard Lim, CEO of Retail Economics, commented: “Social distancing measures and restrictions on gatherings have decimated demand for apparel. These figures show that even fashion retailers with the slickest online operations are reeling from the impact of the pandemic. While the furlough scheme has been a lifeline for many households, the 20 somethings have felt the pinch the hardest which will impact some parts of the market more than others. 

"As a new normal appears, consumers will gain greater conviction over their new needs and wants. For many, this will involve less physical interaction. Retailers will need to provide innovative digital solutions that appropriately support customers on a new, more digitalised, customer journey – from product awareness to service and returns."