Asos expected to capitalise on Brexit after all

The king of fashion e-commerce in the UK is expected to give a trading update on Tuesday. Market expects it to be a positive one, with analysts forecasting Asos to post a 22.9 percent sales growth for the past four months.

Despite pulling the plug on its Chinese operations in April, analysts polled by Reuters estimate Asos is “back on the front foot”, thanks to improvements in delivery options and technology.

Sales for the year are forecast at 1.4 billion pounds, up from 1.15 billion pounds a year ago. Meanwhile, the consensus forecasts point to an uptick in adjusted pre-tax profit from 41.2 million pounds in 2015 to 60 million pounds in 2016.

Optimistic management at Asos raise sales targets across international markets

The group's managers have raised the bar in terms of sales targets: 1 billion pounds in the UK, another billion in Europe and 700 million pounds in the United States.

This time, Asos won´t be blaming its results on unseasonal weather as the online fashion retailer is expected to show “no sign of weather weakness”, analysts at Peel Hunt said.

On a related note, these figures mean that Asos might become one of the first retailers to turn the Brexit aftermaths to its favour. In fact, the AIM´s golden stock is set to reap the benefits of a weak pound, and management said they will pass on the benefit to international customers.

Various analysts are envisaging Asos to capitalise on the fall in the value of the pound, as 60 percent of its customers and sales come from overseas. As recalled by the ‘Herald Scotland´, Pound collapsed below 1.28 dollars for the first time since 1985 last week.

Peel Hunt analyst Jonathan Pritchard said: "The pound gives Asos an opportunity to lower global prices. This will be done at pace, and management's expectation is that this will generate a 'halo' effect to drive higher sales in the future."

Image:Asos Web