Asos profits soar as social engagement blossoms – but cautions about future growth due to Covid’s impact on young people

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Asos saw UK retail sales soar by 18% to £1,175.9m in the financial year just ended, with investment in product range, platform and social media landing 7 million active customers and 30% growth in premier subscriptions.

However, the retailer warned that the impact of on-going Covid-19 restrictions on young people’s incomes could see further growth slow or stall.

Globally, the company delivered total sales growth of 19% to £3,263.5m and profit before tax increased to £142.1m, an increase of £109.0m on the previous year.

Growth has been driven by focussing on strengthening organisational capabilities, removing non-strategic costs, increasing product choice, availability and ‘newness’, as well as improving engagement, says the company.

Asos has paid particular attention to social, focussing on developing engaging video content that “feels native and organic to the app channel”, the retail says.

This programme started well ahead of peak trading and Asos says that it is “maintaining momentum through the second half by successfully pivoting content to reflect the realities of lockdown lifestyles for its customers”.

This has translated into more than 79m engagements across social channels during the year, with some 200m video views and more than 275m story views.

Asos also continues to experiment with different social media channels. Its first TikTok campaign, “AySauceChallenge”, used a combination of ASOS and creator commissioned content to drive Asos brand recognition and awareness to great success. The challenge hashtag generated mor ethan 1.6bn views  and made Asos the only European fashion brand to break a billion views over the campaign period in 2020.

Is has also begun to experiment with content on Twitch, the live streaming platform for gamers

However, the company also noted that it was cautious going forward. It warns: “Whilst we are well positioned for peak trading and the year ahead, we are cautious on the outlook for consumer demand, and will remain so until lifestyles and financial stability for our 20-something customers start to normalise.”

The company continues: “It is clear that a normal pattern of social events is not going to resume in the short term so whilst we have confidence in our ability to continue growing our market share globally, we are cognisant of the economic impact this crisis is having on our 20-something customers and the pressure on their disposable incomes.”

Commenting on the results, David Nicholls, Retail and Hospitality CTO at Fujitsu, says: “Asos’ continued growth is no fluke. While lockdown has created unprecedented challenges for many retailers, Asos has been able to capitalise on consumers’ growing desire for speed, convenience and socially distanced spending by investing in its technology offering to deliver a truly seamless and connected shopping experience.”

He adds: “Alongside its physical Collect+ services, Asos provides a high-quality customer experience online that keeps its customers coming back for more. While the lifestyle of Asos’ 20-something customer base remains disrupted as a result of the pandemic, the online giant is engaging with, and responding to, those changes quickly and effectively to keep sales high. With the country’s three tier system rolled out from today, other retailers should be looking to Asos for how best to engage with their own customers during lockdown.”

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