1Q18 Trading Update

UK fashion pure-play ASOS announced a trading update for the four months ended December 31, equivalent to 1Q18. ASOS grew total revenues and total retail sales by 30%, or 28% at constant exchange rates. This compares to 33% total growth and 27% growth at constant exchange rates in the year ended August 31, 2017. By region, the sales breakdown for 1Q18 at constant currency are as follows:

• UK: ASOS grew UK retail sales by 23% year over year, accelerating from 16% growth in the year ended August 31.
• International: Total International retail sales climbed 32% year over year, versus 36% in the year ended August 31.
• Within International, US sales were up 28%, EU sales were up 34% and Rest-of-the-World sales were up 32% in 1Q18.

CEO Nick Beighton described the acceleration in UK growth as “an exceptional performance.” During 1Q18, in the UK, the company launched a Try Before You Buy service and ASOS Instant, its same-day delivery service. ASOS said its retail gross margin was up 80 basis points on the prior year, in line with its plan.

Outlook

Management said that it remains confident in its full-year guidance, provided in its FY17 results. This guidance is for:

• FY18 reported sales growth of 25%–30%.
• An FY18 EBIT margin of 4%, stable versus FY17.
• FY18 capital expenditure of £200–£220 million.
• Medium-term sales growth of 20%–25% and a 4% EBIT margin.

For FY18, which closes at the end of August, analysts expect ASOS to grow revenues by 28.2% to £2.47 billion. Consensus calls for EBIT to rise by 26.8% and statutory pretax profit to increase by 27.1%.