Online fashion retailer Asos has said it expects the impact of the pandemic to provide a £40 million profit boost which will help drive it towards the top of its annual targets.
The company told investors that strong lockdown demand meant retail sales rose by 23% to £1.32 billion for the period to December 31.
Asos said half-year profits will be buoyed by “at least £40 million” as it benefited from lower customer returns.
However, it also said it expects to be hit with £15 million in Brexit tariff costs due to Country of Origin rules affecting some of its goods.
We have continued to execute well and deliver for our customers, whilst investing into growing our business and driving further efficiency through a strong operational gripNick Beighton, Asos
The retailer, which last week announced a new £90 million distribution site creating 2,000 jobs, said its customer base increased by 1.1 million over the period.
It added that, while overall demand in the market is “supressed”, it remains “more resilient than our initial expectations”.
The group hailed “exceptional” growth in the UK as it also benefited from the closure of non-essential retailers, such as high street fashion stores, moving some customer demand online.
Asos chief executive Nick Beighton said sales of dresses were above expectations before Christmas, but UK growth has still been driven by sales of casual wear and “athleisure” items.
“We sold more dresses than we expected but it was still far below what we would see in a normal year”, he said.
“It was not a Christmas for sequins and high heels but people still wanting new clothes to look nice.”
The boss said the outlook remained uncertain and warned that the pandemic could further impact the finances of its core “twenty-something” customers.
Mr Beighton added: “We are really pleased with the strong performance we have delivered, which is testament to both the strength of our multi-brand model and the hard work of our people.
“We have continued to execute well and deliver for our customers, whilst investing into growing our business and driving further efficiency through a strong operational grip.
“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.”
These are mightily impressive results in an extremely difficult part of the marketRichard Lim, Retail Economics
Richard Lim, chief executive of Retail Economics, said: “These are mightily impressive results in an extremely difficult part of the market.
“Lockdowns, fewer opportunities to mix socially and cancelled Christmas parties have decimated the demand for new outfits this year.
“But what consumers did spend was focused towards casual wear and channelled online, with the retailer well positioned to leverage this opportunity.”
Asos shares were 3.5% higher at 5,376p in early trading on Wednesday.