Clothing & Shoes

Asos forecasts rise as returns fall

Asos has announced that sales and profit for its full year of trading are expected to be “significantly ahead” of market expectations. 

The retailer said that revenue growth is now expected to be between 17% and 19%, with profit before tax in the region of £130m to £150m.  

The strong operational performance and year-on-year improvement in profitability was driven by “stronger than anticipated” underlying demand and a continuation of the “beneficial returns profile” the group highlighted in its last trading statement.

While the group had expected to see underlying returns normalise once lockdown measures eased, it has “become evident” that returns are not increasing at the rate it originally anticipated.

As a result, it has seen a “significant and sustained” reduction in returns rates since April. 

According to the group, this partly reflects rising customer demand for ‘lockdown’ categories, such as activewear and face and body. 

However, rates have been further suppressed below estimated levels by a “prolonged shift in customer behaviour” towards more deliberate purchasing across all product categories, even when sales momentum has improved.

Looking ahead, the group noted the consumer and economic outlook remains “uncertain”, and it is unclear how long the current “favourable” shopping behaviour will continue. Its updated expectations for the current year still reflect this uncertainty, however. 

Nonetheless, it said the extent of its predicted outperformance will be driven by how customer shopping behaviour normalises in the year ahead.

In a statement, the retailer said: “The second half has been a period of tremendous change for ASOS, we have made real progress and shown resilience through the period and are exiting the year in a strong position. 

“We have a robust balance sheet, with a differentiated product offer and global infrastructure to leverage. Against this backdrop we have increased confidence that ASOS will continue to progress as one of the few truly global leaders in fashion retail.”

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