Asos to pay back furlough cash as sales rise during lockdown
Asos today said it will repay cash to Government claimed for furloughed workers as sales rose during lockdown.
The online fashion retailer said that group sales had risen 10% to £1 billion in the four months to June 30, which it calls “P3”. It said full year profits willl be towards the top end of City forecasts.
Asos attributed the growth to “a steady improvement throughout the period, reflecting increasing warehouse capacity, underlying improvement in demand and a beneficial returns profile”.
UK retail sales fell 1% to £329.2 million in the period, but international sales, notably in Europe, were strong, up 17% to £654.1 million.
The update will be closely watched in the City for signs of how Britain’s online-only businesses have coped with the Covid crisis. Analysts may be worried by a fall in margins, which Asos said was due to “adverse product mix reflecting tight inventory management”.
Chief executive Nick Beighton said: “Our performance in P3 shows that we are delivering against this aim despite the tough economic and social backdrop. We have learnt a lot and adapted quickly, and ASOS finishes the period with improved underlying profitability.
“While we remain cautious about the consumer impact of Covid-19 looking forward, we are on track to deliver strong year-on-year profit growth and to return to positive free cash flow for the full-year."
Locked-down Britons have swarmed online to do their shopping, particularly until June 15 when non-essential stores were not allowed to open. However, fashion retailers have reported a dearth in demand for smarter clothes to wear to the office or out in the evening.
A looming and deep recession is also expected to hit discretionary spending.
The fast fashion industry is also battling a reputational crisis, sparked by allegations of slavery in the supply chains of retailers Boohoo and Quiz. Some clothing workers in Leicester are not being paid minimum wage, according to reports. Asos has moved to distance itself from the growing scandal, last week it pulled Boohoo clothing from its site.
