Asos shares jump as profit forecast raised due to online shopping boom
Shares in fast fashion retailer Asos jumped this morning after it announced that full-year sales and profit are expected to beat forecasts due to an online shopping boom during the UK coronavirus lockdown.
Asos said revenue growth is expected to be between 17 per cent and 19 per cent, with profit before tax of around £130m to £150m.
Asos’ share price was up 6.02 per cent this morning at 4,474p after it hiked its profit and sales expectations.
The demand for online shopping has soared during the coronavirus pandemic following the forced closure of non-essential stores for several months during the UK lockdown.
The e-commerce firm said this morning that there had been stronger than anticipated demand during lockdown.
There were also fewer returns as lockdown restrictions eased. Asos had expected customers to return more items as restrictions on movement were lifted.
There has been a “significant and sustained reduction” in return rates since April, as consumers stocked up on activewear and face and body products during lockdown.
However there has been a “prolonged shift” in customer behaviour towards “more deliberate purchasing” across all products.
Despite the acceleration of the shift to online shopping during lockdown, Asos said the consumer and economic outlook is still uncertain.
“It is unclear how long the current favourable shopping behaviour will persist,” the company said in a statement this morning.
The latest research by industry body the British Retail Consortium (BRC) showed that online retail sales continued to soar during July as lockdown measures were lifted.
Online non-food sales soared 41 per cent last month, the analysis showed.
Meanwhile, the online penetration rate increased from 29.7 per cent last year to 42 per cent in 2020.
Analysts at Shore Capital Markets said: “We expect the shares to go better today but also highlight that the shares are up 27 per cent over the last month and up almost 50 per cent over the last three months, so have had an excellent run.
“The company has a strong balance sheet, having raised £240m through an equity raise back in April. This together with momentum and the opportunity to leverage its global infrastructure leaves it well placed to fulfil its ambition to be a global leader in fashion.”