Asos shares hit near two-year high as the online fashion shop hikes profit expectations after home shopping boom during lockdown

  • Asos said demand for its clothes was stronger than expected
  • Pre-tax profit to come in between £130-£150m, compared to £33.1m in 2018-19
  • Shares in Asos closed 13 per cent higher at £47.70 on Wednesday

By CAMILLA CANOCCHI FOR THISISMONEY.CO.UK

Updated:

Shares in Asos have hit their highest level in nearly two years after the online fashion retailer hiked its profit expectations thanks to fewer returns and strong demand for its clothes even after lockdown ended. 

The company said demand for its clothes was stronger than expected, as it benefited from a rise in online shopping during the coronavirus pandemic as physical non-essential stores remained closed for months. 

Asos now expects revenues to rise by between 17 per cent and 19 per cent this year, and pre-tax profit of £130-£150million, compared to £33.1million in the previous financial year. 

Booming sales: Asos said demand for its clothes was stronger than expected

Booming sales: Asos said demand for its clothes was stronger than expected

It had anticipated returns to rise once lockdown ended as people were able, and felt more comfortable, to ship items they bought back. 

However, it said returns have not been increasing at the rate they originally thought, partly down to people splashing on 'lockdown items' like activewear. 

'The improvement in expectations is supported by stronger than anticipated underlying demand and the continuation of the beneficial returns profile highlighted in our last trading statement,' it said.

Shares in Asos closed 13 per cent higher at £47.70 on Wednesday, hitting their highest level since December 2018. 

The company said it had a strong balance sheet but uncertainty about the future remained.

'Looking forward, the consumer and economic outlook remains uncertain and it is unclear how long the current favourable shopping behaviour will persist,' Asos said. 

Last month, Asos confirmed plans to repay the Government the money it saved by furloughing around 1,000 staff via the Job Retention Scheme.   

After its fast fashion rival Boohoo was embroiled in a scandal regarding allegations over working conditions at supplier factories in Leicester, Asos demanded greater transparency from brands which want to sell their clothes on its site.

The fast-fashion retailer recently urged third-party brands to sign the Transparency Pledge – launched in 2016 by nine charities, including Human Rights Watch – which will require them to publicly reveal their manufacturing supply chains. 

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