Asos cuts profit outlook

Asos reported quarterly sales growth of 4 percent in the three months ended 31 May against a prior comparative growth rate of 47 percent reflecting P3 gross sales growth broadly in line with expectations.

The company has updated guidance for the year to reflect uncertain consumer purchasing behaviour and the potential continuation of higher returns. It now expects revenue growth to be between 4 percent and 7 percent, and adjusted profit before tax to be in the range of 20 million pounds to 60 million pounds compared to prior guidance of 110 million pounds to 140 million pounds.

Separately, Asos has announced the appointment of José Antonio Ramos Calamonte as chief executive officer and Jørgen Lindemann as chair.

Commenting on the quarterly trading results, Asos COO Mat Dunn said: “What is now clear, based on the significant increase in returns rates, is that this inflationary pressure is increasingly impacting our customers' shopping behaviour. It is too early to tell for how long the current pattern of customer behaviour will continue but we are taking swift and decisive steps to minimise the impacts.”

Highlights of Asos results

The company’s gross margin declined by 310 bps to 44 percent in the quarter, driven by UK growth of 4 percent with accelerating growth throughout the period as the company cycled a period of more normalised comparatives in the second half of P3. It saw a strong performance in occasion-wear amidst an uplift in demand driven by holidays, weddings and events, which was partially offset by an increased return rates

The EU declined by 2 percent, with return rates trending above pre-pandemic levels in some territories as inflationary pressures impacted consumer purchasing behaviours.

The US grew by 15 percent, supported by continued strength of the Topshop brands, targeted promotional activity, and increased demand for going out wear.

ROW declined by 8 percent. However, Australia returned to growth as delivery propositions improved and Premier was reactivated.