FY16 RESULTS

British online fashion retailer ASOS reported £1,444.9 million in revenues, in the 12 months ending August 31, 2016, beating the consensus estimate of £1,436.6 million, and up 26% year over year. FY16 constant-currency revenues rose 26% year over year. The gross margin contracted by 30 basis points in FY16 to 48.5%. However, this was offset by an SG&A margin decline of 50 basis points, from 46.1% in FY15 to 45.6% in FY16. The adjusted operating margin expanded by 30 basis points from 4.1% in FY15 to 4.4% in FY16. Diluted EPS was 61.8 pence for FY16, up 42% from 43.4 pence in FY15, and beating the consensus estimate of 59 pence.

 GEOGRAPHIC SALES BREAKDOWN

In FY16, UK retail sales grew 27% year over year to £603.8 million. Rest of Europe retail sales increased by 28% year over year at constant currencies to £374.9 million, US sales increased by 40% at constant currency to £179.2 million, and Rest of World revenues expanded 14% year over year at constant currencies to £245.8 million. ASOS active customers increased 25% year over year to 12.4 million, and the number of orders increased 30% year over year in FY16. Average basket value (incl. VAT) increased 3% to £70.84, and the number of items per basket increased 1% to 2.82 in FY16.

GUIDANCE

ASOS stated that the strong performance is continuing into the new fiscal year, and the company expects FY17 revenue growth to fall in the range of +20% to +25%. The company also stated that it expects FY17 margins to remain broadly stable, but that capital expenditures could increase to between £120 million and £140 million, up from £87 million in FY16. FY17 revenue consensus estimates stand at £1,821.7 million, implying annual year-over-year growth of 26%. Consensus expects operating profit of £79.7 million, implying a year-over-year increase of 27%. The FY17 consensus EPS estimate is 76 pence, implying a year-over-year increase of 23%.