ASOS reports muted performance, but has an opportunistic year ahead, says GlobalData

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Following today’s release of ASOS’ figures for the four months ending 31 December 2021; Chloe Collins, head of apparel at GlobalData, a leading data and analytics company, offers her view: “Though in line with its expectations, ASOS has reported a significantly muted performance for the four months to 31 December 2021, with total revenue only increasing by £29m to £1.39bn. As predicted, it suffered a blow from the global supply chain crisis, with longer delivery times impacting its sales in international territories, while it also suffered from rising COVID-19 cases and increased social restrictions dampening demand amid fears of the Omicron variant. ASOS’ guidance for its FY2021/22 remains unchanged since its last results, with revenue growth forecast to be up 10-15% on the year, alongside adjusted profit before tax between £110m-£140m.

“ASOS has announced that it plans to move from the London Stock Exchange’s AIM Market to the Main Market before the end of February 2022, which is somewhat surprising considering its share price has more than halved in the last year. However, its share price experienced an 8% rebound in early morning trade, with investors relieved that ASOS appears to have stabilised. There are significant opportunities for ASOS throughout the rest of the financial year. Its new ‘Partner Fulfils’ programme will expand, following a successful UK trial with sports giants Adidas and Reebok, which should help to improve its branded offer and strengthen its partnerships, which are becoming increasingly important as sports specialists seek to reduce their wholesale operations to focus on direct-to-consumer. ASOS’ Nordstrom partnership is also planned for a further roll out, following a soft launch of the ASOS own brands in two Nordstrom stores and online, and this will help grow brand awareness in the US market, which continues to outperform (revenue grew 12.1% in the period).

“However, there are still many challenges to overcome. Though a new board member, Patrick Kennedy, has been announced, there is still no update on ASOS’ search for a new CEO, after Nick Beighton stepped down in October 2021, with the business still being run by COO Mat Dunn (previously CFO). ASOS has had to implement low to mid-single digit price increases to offset cost inflation, which it may find its price-conscious shoppers are resistant to absorb for non-essential goods. Also, its returns rates are now back at pre-pandemic levels as the assortment mix has normalised back towards fashion-led items rather than loungewear, and rates have likely increased even further since Christmas as consumers returned their unused partywear from cancelled events. Its active customer growth also slowed considerably in the period, and though this is partly due to tough comparatives, it is also likely due to the online young fashion market becoming increasingly competitive, so ASOS must work to regain top-of-mind appeal.”