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(Alliance News) - Online fashion seller ASOS PLC on Wednesday said its revenue growth in the final stretch of 2020 topped expectations with UK sales alone jumping by more than a third, a stark contrast to the crisis gripping high-street retailers.
ASOS shares were 3.8% higher at 5,394.00 pence each in early dealings on Wednesday in London.
In the four months to December 31, which ASOS labels P1, group revenue climbed 23% to GBP1.36 billion from GBP1.11 billion a year earlier. At constant currency, revenue rose 24% year-on-year.
In the UK alone, retail sales had a 36% leap to GBP554.1 million from GBP408.9 million. By region, this was the biggest sales hike, topping the EU's 18% rise, beating the 13% increase in the US as well as the 15% improvement in the Rest of the World segment. The EU region's increase was the same measured at constant currency, but the US and ROW results improved to 17% and 20% growth, respectively, by that measure.
Total international sales rose 16% year-on-year to GBP771.7 million from GBP666.0 million, or 18% at constant currency.
"Revenue growth in the period surpassed our expectations, driven by investment in product, pricing and marketing and stronger than anticipated consumer demand for our products. Our multi-brand model and strong execution enabled us to capture available demand as consumers increasingly shopped online," ASOS said.
"Our performance in P1 also benefited from the resumption of lower returns rates driven by renewed social restrictions in the period."
The retailer said it expects a net-Covid benefit to pretax profit of GBP40 million in the first half of its financial year ending August. ASOS explained that this is due to virus restrictions likely still being in place "for the balance of the first half".
Online-only firms such as ASOS are the beneficiaries from high street outfits being forced to down shutters due to lockdown restrictions.
The company's outperformance during the four-month period comes as bricks-and-mortar retailers endured a tough end of the year, with the usually busy festive period being soured by large areas of the UK, including London, being placed under the most stringent tier 4 curbs. It meant traditionally busy shopping days such as Boxing Day were non-events in 2020.
Poor market conditions in 2020 have seen UK retailers such as Peacocks and Jaegar owner Edinburgh Woollen Mill, Debenhams, and notably Topshop owner Arcadia Group slip into administration.
ASOS added: "Whilst our outlook for the balance of the year remains unchanged, given the ongoing virus and the likely economic impact on our core 20-something consumer, the strength of our performance in P1 with the anticipated firs half Covid pretax profit benefit, means we now expect financial 2021 pretax profit to be at the top end of current market expectations."
Annual capital expenditure guidance was boosted by roughly GBP20 million to GBP190 million, a reflection of the company's investment in US automation, it explained.
ASOS said it will also incur GBP15 million in Brexit-related tariff costs in financial 2021.
Chief Executive Officer Nick Beighton said: "Looking forward, given the uncertainty associated with the virus and the impact on customers' lives, our cautious outlook for the second half of the year remains unchanged. However, the strength of our performance gives us confidence in our continued progress towards capturing the global opportunity ahead."
By Eric Cunha; ericcunha@alliancenews.com
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