Despite bumper top-line results, shares fell 7% on concerns that discounting might erode profits
Companies: ASOS plc
Online clothes retailer ASOS has reported a 54% jump in international sales in the past six months after weaker sterling gave the Company a significant boost to its exports.
In interims reported on Tuesday, the AIM-listed firm said the Brexit-caused fall in sterling had allowed it to invest more resources into its international business, enabling it to offer products at lower export prices.
Revenues rose 37% to £911m, with domestic sales growth of 18% and international sales growth of 54%. Gross profit rose 36% to £440m, and its gross margin fell 60bps to 48.3%.
Currency tailwinds boosted international sales growth by 12%, and overall revenues by 6%. This still means that on an underlying basis, the firm enjoyed 42% sales growth overseas to £548m. Boohoo, one of ASOS's key competitors on the AIM market has also sought to target the lucrative US market.
After the Brexit vote in June last year, Sterling fell considerably against the dollar, meaning that anything bought by international customers from companies in the UK can be exported at a lower cost less.
However, whilst the company raised its full-year sales growth guidance to 30-35%, FY PBT was left in-line with market consensus, with the retailer stressing that discounting and a weak pound was weighing on profitability. Shares opened down 7% as a result.
CEO Nick Beighton said the strong results showed great progress across the business, with "excellent" international growth:
"Customer acquisition, up 29%, takes our active customers to over 14m. We passed the 5m active customer mark in the UK, where we have shown solid sales growth of 18% in a more promotional market. We've accelerated our significant infrastructure and technology projects which remain on track, and Eurohub 2 went live in March. "