Asos ups forecasts amid lockdown sports gear boom
Online fashion retailer Asos has said “stronger than anticipated” demand for its clothes has continued even as High Street rivals reopened after lockdown.
Sports gear and face creams had continued to sell well, it said.
And customers had not been returning items at anything like the rate Asos was expecting, it said in a statement.
As a result, Asos said sales and profits this year will be better than expected, sending the share price more than 10% higher in early trading.
The retailer now forecasts revenue growth of 17% to 19% for this financial year, with pre-tax profits now expected to be in the range of £130m to £150m.
In its trading update, Asos said people had been sending back fewer items during lockdown and it had expected return rates to increase after restrictions were lifted. But this had not happened.
“As a result, we have seen a significant and sustained reduction in returns rates since April,” Asos said.
This is part reflects demand for so-called “lockdown categories” such as sports and leisurewear, and customers indulging themselves with things like face creams and make up.
Asos said the lower return rates were also down because of “a prolonged shift in customer behaviour towards more deliberate purchasing across all product categories, even when sales momentum has improved”.
However, there was a note of caution. “Looking forward, the consumer and economic outlook remains uncertain and it is unclear how long the current favourable shopping behaviour will persist,” Asos said.
Last month, Asos said it would repay cash to the government it claimed for furloughing workers.
Liberum analyst Adam Tomlinson said Wednesday’s news comes a day after Zalando reported a high single-digit percentage decrease in return rates.
“A key driver of (Asos’s) better profit outturn for the year is that return rates are better than expected, which is consistent with what Zalando said yesterday,” he said.
Mr Tomlinson added: “While Zalando expects return rates to revert back to pre-Covid levels, Asos are not seeing this dynamic play out at the rate they were expecting.”