Apr 8, 2021
ASOS released its interim results on Thursday and the fashion e-tail giant confirmed just how
strong it is, with or without the pandemic.
In the six months to the end of February, record results saw group revenues rising 24% — or 25% at constant currency — to £1.976 billion. Retail sales rose by the same percentages to £1.92 million. But the gross margin fell to 45% from 47%, driven by increased freight costs due to Covid-19 disruption, foreign exchange movements and the continued 'lockdown' category product mix.
Yet that didn’t hurt its profits. Adjusted EBITDA was up as much as 90% at £180.8 million and reported pre-tax profit rose 253% to £106.4 million. Adjusted pre-tax profit was up an even bigger 275% at £112.9 million.
All this came as the company made the most of the opportunities that arose because of the pandemic with its active customer base increasing by 1.5 million to almost 25 million people over the six months. Its good growth in new customers balanced fewer event-led reasons for existing customers to shop.
ASOS also said it saw an “exceptional UK performance with 39% sales growth, and good growth in international territories”. That meant EU sales rose 18%, the US 16% and the rest of the world (RoW) was also up 16%.
CATEGORY AND BRAND PERFORMANCE
Overall across its platform, ASOS saw “further outperformance of 'lockdown' categories supported by continued flexibility in shaping our product offer to demand”. It didn’t only do well in fashion with beauty also strong. Its Face + Body category grew by a record 114%, while activewear rose 95% and casualwear 69%.
The six months was a key period for the firm as it took a big step in buying some of Arcadia's brands, including its star Topshop label. It said the “Topshop brands integration [is] progressing to plan” and it saw a “successful customer relaunch on 22 February [with] great early customer momentum”.
In fact, since taking on Topshop, Topman, Miss Selfridge and HIIT, it has seen “a significant step change in site traffic to these brands post-customer relaunch, with a 226% increase in traffic on launch day alone, driving strong sales momentum across [the labels].”
The US has seen the strongest growth rates for the label, along with the UK and Germany, supported by strong social media campaigns — of which its two TikTok launch campaigns were the most successful, with a combined reach of over 200 million and almost 3 billion video views.
“We know that these brands resonate well with our consumers in these three countries and are pleased to see this translate into strong initial growth momentum on our platform, in line with our expectations,” ASOS said.
Its existing brands have also done well. ASOS Design continued to show “pleasing growth overall despite the continued shift towards 'lockdown' categories”.
Excluding the mix effect of a shift away from 'going out' categories, it delivered 24% growth year-on-year, “underlining our agility and flexibility to shift into casual and activewear categories”.
Supported by this shift in consumer behaviour, it also saw ASOS 4505 continue to capture growth in activewear, posting a 68% increase. “Sportswear will remain a strategic focus going forward, supported by the addition of HIIT to our portfolio,” it said.
Within its ‘venture brands’, “Collusion broke into the top three womenswear brands on the ASOS platform and continues to show exceptional performance with 93% growth and 70bps mix growth within our overall portfolio”.
Reclaimed Vintage saw a “stellar performance” with 92% growth, expanding its share of product mix by +30bps. It also launched As You, its fashion forward product offering at a lower price point, “manufactured at speed to give us maximum flexibility”. Since launch, it has expanded the offering from 120 products to 600 and has sold over 200,000 units, the majority of which are jersey tops and casual bottoms.
And it has continued to add other brands to its platform with 120 new brands added.
LOGISTICS
Brands are key but logistics are important too. The company said H1 saw over 100 new delivery enhancements and 18,300 new Click & Collect locations to expand total Click & Collect offering to 166,000 locations globally.
It added that the overall ASOS platform "continues to strengthen, enhancing customer choice and product availability”. It’s been investing in pricing, principally in Europe, to further strengthen its customer proposition and has maintained its flexibility throughout the pandemic period, It said “flexible fulfilment is progressing to plan [with] further deployment of unified stock pool between UK and US ahead of further rollout across ASOS and subsequent development of partner fulfilment capabilities by the end of this calendar year”.
So where does this leave it for the future? Looking good, it seems. The company doesn’t expect any kind of downturn once physical shops reopen and said that it’s “well positioned to capture demand for event-led product when lifestyles normalise”. But it’s staying cautious on the near-term consumer outlook “driven by uncertain 20-something economic prospects, timing of global restrictions lifting and possible further Covid-19 peaks”.