ASOS defies Brexit fears with 28% rise in sales
Online fashion firm ASOS shrugged off Brexit fears for retailers as it upped its full-year sales outlook after cheering "strong" trading.
The group posted a pick-up in sales growth for the four months to June 30 - up 28% in the UK at £203.1 million and 25% to £297.4 million across its burgeoning international arm with currency movements stripped out.
ASOS, which stands for As Seen On Screen, said the robust third-quarter performance meant sales for the full year were now expected at the top end of its forecasts for between 20% and 25% growth.
Annual profits are set to be in line with expectations, it added, as its focus on lowering prices will weigh on profit margins.
Its update bucks mounting woes among its high street rivals, with signs that sales slowed in the run-up to the EU referendum vote and have been hit by poor April and early summer weather.
The latest British Retail Consortium-KPMG survey showed that like-for-like sales fell by 0.5% in June compared with a year ago, triggered by weaker clothes sales.
Marks & Spencer also last week revealed that its beleaguered clothing arm suffered its worst sales performance for more than a decade as it cut back on promotions amid a "weak market".
ASOS, which targets fashion-conscious 20-somethings, said sales growth ramped up further across its overseas sites, which now account for more than half of group turnover.
It said US retail sales surged by 45% with exchange rate effects stripped out, while sales grew by 22% on a constant currency basis across the EU.
But the group's profit margin fell after it moved its main clearance sale into the third quarter, as well as continuing to cut prices.
Some analysts are predicting ASOS will capitalise on the recent plunging value of the pound, as 60% of its customers and sales come from overseas.
The group signalled further moves to keep prices down.
Chief executive Nick Beighton said: "Given the increased momentum within the business, combined with our strong financial position, we will maintain our successful programme of reinvestment to take advantage of the opportunities currently available to us."
ASOS booked a double-digit hike in half-year profits in April, up 18% to £21.2 million in the six months to February 29.
But the first half results showed ASOS counted the cost of its failed Chinese venture, with interim losses of £2.7 million, following losses of £3.1 million a year earlier.
It previously said it would take a £10 million hit from the closure of the operation, which shut down in May , with the group now trading through ASOS.com rather than a local website.
ASOS shares leapt 5% higher after the update.
Mr Beighton said the firm's push to boost mobile and tablet sales helped it weather the slowdown seen among high street rivals in the run-up to the Brexit vote.
He also confirmed he would keep cutting prices, thanks to the expected boost from the weak pound, which will make clothes cheaper for overseas shoppers.
"Around 55% of our customers are non-UK and so in the short term the exchange rate weakness will give happy consequences for our customers," he said.
He added that the extra overseas trade will offset any hike in costs from the weak pound, such as cotton, which is sourced in US dollars.
Liberum analysts said ASOS had reported a "very strong update" and hiked their full-year profit forecasts by 5% to £62 million.