3Q18 Update

ASOS, the UK-based fashion pure play, reported that total revenues and total retail sales each rose by 22%, or by 21% at constant exchange rates, in the four months ended June 30, 2018, which is equivalent to 3Q18. This compares to revenue growth of 27% in 1H18, or 25% at constant exchange rates. By region, ASOS reported the following:

• UK: ASOS grew UK retail sales by 23% year over year, a slight increase from 22% growth in 1H18.
• International: Total International retail sales rose by 21%, considerably slower than the 31% growth registered in 1H18.
• Within International, US sales were up 15% in 3Q18, EU sales were up 31% and Rest-of-the-World sales were up 11%.

CEO Nick Beighton expressed satisfaction regarding the 3Q18 performance and remarked that this was in line with the plans for the full year. He noted that gross margin was up by 130 basis points, which was better than planned, and that considerable progress was made with regard to infrastructure investments.

Outlook

Management’s guidance for FY18 remains consistent with what was provided at the 1H18 results update for:

• Full-year revenue growth of 25%–30%, likely toward the lower end.
• An EBIT margin of 4%.
• Capital expenditure of £230–£250 million.

For FY18, which closes at the end of August, analysts expect ASOS to grow revenues by 28% to £2.45 billion. Consensus calls for EBIT to rise by 26% and statutory pre-tax profit to increase by 26%.