Asos comeback: e-tailer on track as peak period sales rise 20% globally
Asos said it delivered an “encouraging” start to its financial year when it issued a trading update on Thursday, with the four months to December 31 seeing both total group revenue and total group sales up 20%.
The former rose to £1.106 billion and the latter to £1.075 billion as its operations both in its domestic UK market and abroad rose in healthy double-digits.
It was an improvement on the firm's latest full year (the 12 months to August 31) when group revenues rose only 12%. But after a few stumbles in recent periods (some of them self-inflicted) the company said that its focus through the four months was on “restoring consistent operational execution and rebuilding customer momentum”.
And it seems to have achieved this aim. Its UK retail sales rose 18% to just short of £409 million while EU retail sales were up 21% to £332.5 million (the latter rose 22% currency-neutral). In the US, the company managed a 23% increase to £139.3 million (up 20% currency-neutral), and in the rest of the world, retail sales rose 23%, both on a reported and currency-neutral basis, to £194.2 million. That all added up to a 22% increase in overall international retail sales to £666 million.
But the gross margin dropped 170bps “reflecting US duty and investment in customer acquisition as planned”.
Asos said it saw “a good performance across all regions, reflecting a record Black Friday and strong customer engagement activity throughout the period”.
Total orders were up 20% to 27.7m “supported by robust operational performance through peak period at all our distribution centres," which is good news given that this is the area in which it had fallen down in previous periods.
It also saw "strong customer momentum” with visits up 23% year-on-year and a 1.4m increase in active customers during the four months.
Overall, the actions it took to rebuild customer momentum during the peak trading period delivered a "better than expected sales performance”, largely driven by the Black Friday weekend, which turned out to be busier for the retail sector as a whole than anyone had predicted.
The company added that the four months saw improvements in product choice and stock availability; presentation and social media engagement; and optimising customer acquisition and reactivation. “These actions alongside our increased capacity and more robust operational footprint ensured we were able to participate fully in this key period for customer acquisition,” it explained.
But it insisted that there’s “still much work to be done to capitalise on this encouraging start as we begin to cycle the improvements we made in the prior year in terms of presentation and customer engagement”. Its plans and outlook for the year are therefore unchanged “as we continue to focus on the actions required to support our long-term growth and the retention of those customers we have recently acquired”.
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