ASOS shines through the retail doom and gloom

Following the news that ASOS has raised its full year sales and profit expectations;

Sofie Willmott, Lead Analyst at GlobalData, a leading data and analytics company, offers her view on this news:

“While many other clothing retailers have announced significant sales drops since COVID-19 hit, alongside store closures and redundancies, agile ASOS has benefitted from its quick response to the pandemic, pivoting its product offer and reaping the rewards. Sales for its financial year to the end of August are now forecast to be 17-19% higher than last year, far outperforming the UK clothing & footwear market which is set to decline 28.1% in 2020, with ASOS sweeping up market share from its competitors. ASOS’ share price rose 10% this morning and is  now back to its highest level since late 2018 demonstrating investors’ confidence in the future of the business, despite it being a mature online player.

“Store-operating clothing & footwear retailers have had numerous unforeseen problems to contend with over the last few months but without the hindrance of physical locations, ASOS has been able to focus on marketing and stocking its most relevant lockdown products such as sportswear, loungewear and beauty. Although it is traditionally more reliant on other categories such as dresses and high summer clothing for holidays at this time of year, ASOS’ broad product range has enabled it to continue providing what its customers want, despite preferences shifting dramatically in recent months.

“ASOS has benefitted from more intentional purchases since the pandemic with returns rates reduced, positively impacting its sales and profit expectations, however it is unlikely that this pattern will continue into next year as shoppers’ lives start to get back to normal. As weddings and holidays will be back on the agenda in 2021, ASOS is likely to see its young, tech-savvy customers go back to their ways and buy more items to choose from at home, before returning a significant proportion of their order.”

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