Asos sales surge as strong demand in US offsets China exit

Shares in Asos climbed almost 3% early on Tuesday (12 April), after the online fashion retailer posted half-year results that comfortably beat expectations on the back of a surge in sales in the US and price investment. In the six months to 29 February, the London-listed company saw revenues surge 21% year-on-year to £667.3m (€831.7m, $950.9m) compared to the the previous year, beating the consensus forecast of £662.8m.

UK retail sales were up 25% from the corresponding period 12 months ago, while international sales rose 18%, or 24% at constant currency rates, which, according to chief executive Nick Beighton, demonstrated improving momentum in the business.

European sales increased 23% year-on-year but Asos' US retail arm was the standout performer in the period, with sales growing 41%, helped by currency effects and an "increased range of locally relevant brands" coupled with investment in price and a new membership scheme.

The group could also receive a £6m to £8m boost in the second six months of its financial year following the introduction of new US import duty thresholds last month, and there are plans already in place to fully reinvest the money back into the US market.

Profit before tax increased 18% year-on-year to £21.2m, beating consensus of £20.1m, while UK margins expanded by 170 basis points as investment in automation at the Barnsley warehouse began to pay off.

Reported earnings per share advanced 4% pace to 18.3p after being hit by a 7.6% percentage point increase in the effective tax rate. That came after Asos decided earlier in April to discontinue its local operations in China, which meant the losses accumulated in the world's second-largest economy are no longer held as a deferred tax asset and therefore will not be able to offset against future profits.

Beighton, who took over when founder Nick Robertson stepped down in September, said he was encouraged by the 17% growth in active customer numbers to 10.9m and expected the company to achieve its full-year targets.

"I'm pleased to confirm that we are on track to achieve our previously stated sales and margin guidance for the full year," he added.