Asos triples profits as Covid crisis boosts online sales

Asos has more than tripled first-half profits to a record £106m and raised full-year expectations as the online retailer continued to benefit from the pandemic.

Consumer trends accelerated by Covid-19 had boosted trading, particularly in the UK and most of Europe, the company said, but it cautioned that the economic outlook was uncertain and shopping habits would change once clothing stores reopen next week.

“In the coming months we expect a portion of consumer demand will move back to stores as restrictions are eased throughout our markets, but we expect online penetration to remain structurally higher than pre Covid-19 levels,” Asos said.

Profits increased 253% year-on-year increase to £106.4m in the six months to 28 February, as total group revenues climbed 24% to £1.97bn.

Asos put a number on the amount of profit generated by the pandemic, identifying £48.5m of “net Covid tailwind”. But it cautioned that the benefit is expected to disappear when restrictions are lifted on the hospitality and tourism sectors and consumers have more spending options.

The company said the Topshop, Miss Selfridge brands, and activewear label HIIT, acquired from Sir Philip Green’s Arcadia empire for £330m in February, had been “seamlessly” integrated into its online platform and had seen “great early customer momentum”.

Active customer numbers rose 1.5m to 24.9m, which the company said was a good performance given the lockdown had led to fewer “event-led” reasons for customers to shop for formal and occasion wear.

“We are delighted with our exceptional first-half performance,” said Nick Beighton, chief executive. “These record results, which include robust growth in sales, customer numbers and profitability, demonstrate the significant progress we have made against all our strategic priorities and the strength of our execution capability. The swift execution of the Topshop brands and the impressive early customer engagement is also pleasing.”

The company pointed to the “exceptional” performance of the UK market with sales up 39% for the half year, more than double the rate of growth reported in its other markets.

There was strong growth in sales of key “lockdown” clothing categories, including a 121% increase in sales of activewear and an 86% rise in casual wear sales revenues in the UK.

While Asos said it was well-positioned for significant sales of “event-led” clothing when “lifestyles normalise”, the company remains cautious about factors including the uncertain economic prospects of its core twentysomething consumers, as well as further waves of the pandemic.

“Looking ahead, while we are mindful of the short-term uncertainty and potential economic consequences of the continuing pandemic, we are confident in the momentum we have built,” Beighton said.