Asos sees peak demand rise on last year, but counts the cost of supply chain issues

Image courtesy of Asos

Image courtesy of Asos

Fast fashion pureplay Asos saw a modest rise in demand ahead of Christmas – compared to last year – as some customers bought going out clothes from brands including Topshop. It now plans to expand a programme that sees brand partners take on fulfilment direct to customers. 

Asos says UK shoppers bought going out clothes in the run up to Christmas, helping to lift sales by 2% at the beginning of its financial year. European trade declined, however, as shoppers were more likely to kept at home through Covid-19 restrictions. 

Asos says uncertainty around demand and returns rate uncertainty, related to the Omicron variant, is likely to continue in the short term, but its full-year guidance for revenues (+10%-15%) and pre-tax profits (+£110m-£140m) remains unchanged.

The retailer, ranked Leading in RXUK Top500 research, saw active customer numbers rise by 0.3m to £26.7m over the period, while gross margins fell by 400 base points to 43%. Profitability took a hit as the retailer discounted to shift slow-moving spring and summer stock, and following increased freight costs and the use of air freight to get around supply chain issues. Asos now expects supply chain delays to ease and stock levels to get back to normal, post-Christmas.

Asos piloted a partner fulfilment programme with Adidas and Reebok in the UK in November, and plans to build on that in 2022, rolling it out to Europe as well. Sales of Topshop brands now on the Asos platform – and part of the group – grew by more than 200% year-on-year, with the fastest growth in the UK, Germany and the US. The retailer is now selling its own brands – Asos Design, Edition and Luxe – in two branches of Nordstrom and online, with Asos Curve only available at Nordstrom.com. 

Asos today reported group sales of £1.4bn in the four months to December 31 2021. That’s 2% up on the same time last year. UK sales were 13% ahead at £645.2m, while EU sales were 3% down at £390.2m, US sales grew 7% to £172.6m and sales in the rest of the world were 20% down at £185.1m.

Asos chief operating officer Mat Dunn says the retailer made a robust start to the year, despite challenging market conditions. “We continued to make progress against our objectives to improve the flexibility and speed of our retail model and accelerate the pace of delivery of our international growth strategy,” he says. “Looking ahead, while mindful of the near-term uncertainty relating to the pandemic, our guidance for the full year remains unchanged.”

Asos also announced plans to move from AIM to the main market of the London Stock Exchange. 

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