The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
LONDON, United Kingdom — UK online fashion retailer Asos Plc raised its full-year sales forecast after luring customers from Russia to the US with cheaper prices.
The company said international sales grew by 54 percent to £548.4 million ($682.2 million) in the first half, after it reinvested savings from the weaker pound into lowering prices for overseas customers. Asos raised its full-year sales-growth forecast range by 5 percentage points to between 30 percent and 35 percent.
“This is a very strong top-line performance for Asos, particularly when compared with Next’s recent online growth and outlook comments,” Richard Chamberlain, an analyst at RBC, said by email. Next Plc, which operates stores and online shopping, last month said profit would fall for a second consecutive year.
The effort to win business through lower prices did hold back margins, weighing on the shares. Asos was down as much as 4.6 percent in early London trading after posting recent highs, though it’s still up 74 percent over 12 months.
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The company’s retail gross margins contracted by 40 basis points, to 47 percent, in the first half. Asos expects to report full-year pretax profit broadly in line with consensus estimates.
While the decline in the pound since the UK voted to leave the European Union hurts retailers that import their wares and sell largely to domestic customers, it’s a boon to Asos because it generates about 62 percent of its sales from overseas customers. The retailer, which sells own-label fashions alongside wares from brands such as Adidas and Ted Baker, has used the currency’s weakness to lower prices for international customers.
The Japanese apparel chain will be launching its sister brand GU in the US later this year, targeting younger consumers with lower prices and a curated selection of trendy wares.
Canada, France and Ireland are among the countries working with home-grown fashion talent to create uniforms for their teams at this summer’s Olympic Games. For these small labels, it’s an unprecedented opportunity to capitalise on one of sports’ largest events.
The online fashion retailer plans to update China’s securities regulator on the change of the initial public offering venue and file with the London Stock Exchange as soon as this month, a person with knowledge of the matter said.
The company, under siege from Arkhouse Management Co. and Brigade Capital Management, doesn’t need the activists when it can be its own, writes Andrea Felsted.