Source: Company reports/Coresight Research         

1H18 Results

British fashion pureplay ASOS reported revenue growth of 27.1% to £1.16 billion in the first half ended February 28, 2018. At constant currency, revenues grew by 25.0%. Group revenues were slightly lower than the consensus estimate of £1.17 billion, as recorded by S&P Capital IQ. Retail gross margin increased by 100 basis points but was offset by delivery receipts growing at a marginally slower rate to retail sales and resulted in a gross margin increase of90 basis points. Operating margin expanded by 40 basis points. Diluted EPS was 29.2 pence, representing an increase of 11.0% from 1H17, and lower than the consensus estimate of 41 pence, as recorded by S&P Capital IQ. ASOS provided the following additional details about performance during the period:

• Retail sales jumped by 27.0% as reported and by 26.0% at constant exchange rates.
• UK retail sales grew by 22.0%, driven by new category expansion and proposition enhancements such as “Try Before You Buy.”
• US retail sales increased by 20.0% as reported and by 27.0% at constant currency, driven by average basket value and conversion improvements. ASOS said that as the British pound strengthened against the US dollar during the period, it will impact reported sales growth in the region.
• Retail sales in the EU bounced 40.0% as reported and 32.0% at constant exchange rates. Strong growth in France and Germany, proposition improvements and the launch of the retailer’s new fast delivery service ASOS Premier in several countries boosted performance in the region.
• Retail sales in the rest of the world increased by 25.0% as reported and by 24.0% at constant currency.
• Site visits crossed the one-billion mark for the first time, during 1H18.

Outlook

ASOS said that its “current year and…medium-term sales and EBIT margin guidance remain unchanged.” At its FY17 results announcement, ASOS guided for:

• FY18 reported sales growth of 25.0%–30.0%.
• An FY18 EBIT margin of 4.0%, stable versus FY17.
• FY18 capital expenditure of £200–£220 million.
• Medium-term sales growth of 20.0%–25.0% and a 4% EBIT margin.

For FY18, which closes at the end of August, analysts expect ASOS to grow revenues by 28.7% to £2.48 billion. Consensus calls for EBIT to rise by 27.3% and statutory pretax profit to increase by 27.8%.