Online fashion retailer ASOS (ASC:AIM) saw first half profits surge 275% higher to £112.9 million as youthful fashionistas starved of the opportunity to shop on the high street turned to the web instead.

Yet the high-flying shares fell 2.8% to £56.26 after ASOS increased its full year expectations only ‘in line’ with its superb first half performance.

A beneficiary of the consumer shifts accelerated by Covid, ASOS also left its second half outlook unchanged, citing the uncertain economic prospects of its core fashion-loving 20-something customer base and with restrictions starting to ease.

HEAD-TURNER OF A HALF

Record results for the half to 28 February 2021 revealed total sales growth of 25% to approaching £2 billion driven by ‘exceptional’ growth in the UK with a mixed performance overseas.

On home turf, coronavirus restrictions hammered ASOS’ high street rivals, helping its active customer base to grow by 1.5 million over the six months to 24.9 million.

In February this year, ASOS snapped up the Topshop, Topman, Miss Selfridge and HIIT brands from the administrators of Philip Green’s collapsed Arcadia empire and the integration process is ‘progressing to plan’.

Although the deal didn’t include the physical shops themselves, there is speculation Topshop’s flagship store on Oxford Street might be reopened. This would give ASOS a physical space to showcase its brands for the first time.

REMAINING CAUTIOUS

‘These record results, which include robust growth in sales, customer numbers and profitability, demonstrate the significant progress we have made against all of our strategic priorities and the strength of our execution capability,’ enthused ASOS CEO Nick Beighton, adding that ‘the swift integration of the Topshop brands and the impressive early customer engagement is also especially pleasing’.

While ASOS is ‘mindful of the short-term uncertainty and potential economic consequences of the continuing pandemic’, the retailer is also ‘confident in the momentum we have built, and excited about delivering on our ambition of being the number one destination for fashion-loving 20-somethings.’

UNFOUNDED FEARS

AJ Bell financial analyst Danni Hewson said fears that ASOS would suffer because its core youthful demographic has been disproportionately hit from a financial point of view by Covid-19 ‘have so far proved unfounded – even if the company itself is cautious on that point going forward.

‘And it doesn’t seem like being unable to go out and socialise has stopped people from wanting new clothes – after all taking the bins out or a trip to the supermarket have become the equivalent of going out to a club or pub and people have still wanted new joggers and sweatshirts to hang out at home.

‘Reopening should offer some benefit as people refresh their wardrobes to get out and do stuff again but will also see some demand filter back to shops.

‘Though like other trends accelerated by the pandemic, a greater proportion of people buying clothes online is something which looks to be here to stay.’

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Issue Date: 08 Apr 2021