Asos posts sales and profit growth, CEO Nick Beighton steps down
For the year to August 31, 2021, Asos plc reported total sales growth of 22 percent to 3,910.5 million pounds. The company said that growth was underpinned by exceptional performance in the UK which grew at 36 percent, whilst internationally sales growth in both the EU and US was 15 percent and 21 percent, respectively, reflecting the wholesale contribution in P4 which continues to gain momentum. RoW delivered 6 percent growth year-on-year. The company’s pre-tax profit increased by 36 percent to 193.6 million pounds.
Asos has also announced a number of board changes. The company added that Nick Beighton will step down as CEO, while Mat Dunn, CFO, will take on the additional role of chief operating officer and lead the business on a day-to-day basis, with Katy Mecklenburgh, currently director of group finance, to support as interim CFO. Ian Dyson will become chair, replacing Adam Crozier, while Jorgen Lindemann will join the board as a non-executive director.
Commenting on the company’s annual performance and outlook, Mat Dunn, chief operating officer and CFO of Asos, said: “Asos has delivered another strong performance, with continued growth in customer numbers driving further increases in sales and profits. Looking ahead, while our performance in the next 12 months is likely to be constrained by demand volatility and global supply chain and cost pressures, we are confident in our ability to capture the sizeable opportunities ahead. I am delighted to be taking on the role of COO and will work tirelessly with all Asos-ers to deliver against our refreshed strategy.”
Review of Asos’ financial performance
The company further said that since launch, Topshop, Topman, Miss Selfridge and HIIT have established themselves as a key part of the Asos brands offer, with sales growing by triple digits year-on-year since acquisition.
Topshop brands have contributed an estimated 61.7 million pounds of incremental sales since the acquisition and integration. From a geographical split, the UK contributed more than 50 percent of the total Topshop brands sales, with Europe contribution at 23 percent and US contribution at 16 percent.
The company’s active customer base increased by 3 million to reach 26.4 million active customers, up 13 percent year-on-year.
Gross margin stepped back by 200bps, while adjusted pre-tax profit increased by 36 percent to 193.6 million pounds. Excluding the impact of the estimated Covid-19 benefits from FY21 and FY20 PBT, the company delivered 3.2 percent adjusted PBT margin reflecting a 20bps expansion on the prior year, and 30 percent growth in PBT. Basic earnings per share increased by 2 percent to 128.9p, whilst diluted earnings per share remained broadly flat at 125.5p.
Highlights of Asos results throughout core geographies
The company reported sales growth of 36 percent to 1,652 million pounds in the UK. The company saw a reduction in churn rates coupled with strong growth in new customers and added 1.4 million new customers during the period. The company said that underlying year-on-year P4 sales growth of 29 percent, slowed relative to our performance in P3 of 37 percent driven in part by tougher comparatives, in addition to a poor summer season, a warmer start to autumn/winter, and travel-related restrictions.
In the US, retail sales grew by 18 percent and total sales by 21 percent. Total sales growth was supported by wholesale sales contribution from the Topshop brands, which launched in April 2021. Asos added 0.3 million new customers during the period, reflecting a 9 percent increase in the active customer base with visits growth of 16 percent. The company added that Topshop brands continue to resonate strongly in the US market, with the US now accounting for 16 percent of FY21 Topshop retail and wholesale revenues.
Europe delivered sales growth of 15 percent along with 13 percent growth in active customer base. Growth slowed in P4 to 4 percent impacted by more muted consumer demand.
Rest of World growth stepped back to 6 percent with 3 percent growth in active customers. The company saw an increase in churn rates and slower growth in new customers. Asos has seen a decline in market share in Australia due to local competition. Also within Russia, market growth has been subdued.