ASOS hits bump in the road but still far outperforms in the UK, says GlobalData

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Following today’s release of ASOS figures for the four months ending 30 June 2019, Sofie Willmott, lead analyst at GlobalData, a leading data and analytics company, comments: ‘‘Online fashion giant ASOS has reduced its FY sales and profit expectations, spooking investors and causing share price to tumble 13% this morning. However, the slowdown has been attributed to operational changes, which are essential for the retailer to continue expanding internationally. Delivering consistent double-digit top line growth in recent years has been supported by increased warehouse capacity and improved logistics processes, and the changes being made to US and EU distribution centres are vital to facilitate long-term growth in these key markets. ASOS will need to focus on winning back disappointed shoppers by bolstering its marketing efforts. Though this may need to include discounts, by recovering customers quickly they will not be lost forever.

“While no major changes have been made to UK operations, its domestic market outperformed both ASOS’ total growth as well as the UK online clothing & footwear market which GlobalData forecasts will grow 8.2% in 2019. Accelerated growth from the mature player is admirable particularly with Next ramping up its branded offer and Amazon’s sights set firmly on the fashion market, alongside continued rapid growth from online value players like PrettyLittleThing. ASOS continues to innovate and introduce new tools to drive conversion and adapt to its demanding young shopper base, such as its recently added responsible filter. However despite strong UK growth, with 62.6% of retail sales coming from international markets, a robust UK performance is not enough to protect top line results.

“Despite another profit warning from the previously untouchable online pureplay, the future remains bright for ASOS. The retailer’s agility and willingness to change to remain relevant to its customer base will help it to continue gaining market share both at home and abroad.”