ASOS, the popular online fashion retailer, has announced its financial results for the first half of the year and has reported strong sales and a profit that aligns with expectations. However, the company has also warned about increased risks in the external environment. Despite facing supply chain challenges due to industry-wide issues and ongoing COVID-19 restrictions, ASOS achieved a 4% revenue growth in constant currency, and a pre-tax profit of £14.8 million for the six months ending in February.

ASOS has mentioned that it has made significant operational advancements so far this year, leading to an improved stock position in the second half. This has allowed for increased availability and introduction of new products. However, the company has also acknowledged that the external environment presents higher risks than normal. Normally, Russia contributes about 4% to ASOS’ sales, but the company did not receive any contribution from Russia in the second half of the year.

While ASOS reported a 4% increase in group revenues, reaching £2.004 billion, the growth was only 1% in total. The gross margin declined from 45% to 43.1%, and the company experienced an operating loss of £4.4 million compared to an operating profit of £109.7 million in the previous year. The adjusted EBIT decreased by 77% to £26.2 million, and the reported pre-tax loss decreased by 115% to £15.8 million. Although ASOS achieved an adjusted pre-tax profit, it was 87% lower than the previous year.

Despite facing challenges in stock availability, both the UK and US markets performed well for ASOS. UK sales grew by 8% and reached £895.5 million, driven by an increased demand for going-out attire. European sales only increased by 1% due to supply chain constraints and ongoing COVID-19 restrictions. Germany experienced strong performance, while France had weaker trading as customers returned to physical stores. The US market achieved an 11% revenue growth, despite facing supply chain issues, and also witnessed its highest-ever peak sales month in November.

ASOS has also expanded its wholesale business in the US, by introducing select ASOS brands in Nordstrom stores and on Nordstrom.com. However, total sales in the rest-of-world (ROW) market declined by 10% on a constant currency basis due to low stock availability and delivery constraints, particularly in Australia and Israel.

Despite the challenges, ASOS saw triple-digit sales growth for its Topshop brands, with a year-on-year increase of 193%. These brands performed exceptionally well in the UK, US, and Germany.

Looking ahead, ASOS is optimistic about the second half of the year. The company expects to have more new and available products due to improved stock levels. ASOS plans to expand its Partner Fulfils service to Europe after successfully implementing it in the UK. It has also highlighted the growth of its Premier subscription program, which has seen a 24% increase in subscribers. ASOS will continue to invest in data science to personalize the customer experience and support its Data Strategy.

However, ASOS has also acknowledged the potential challenges in the future. The company anticipates a higher risk in the second half of the year, as the full impact of recent inflationary pressures on consumers and potential constraints on discretionary spending are yet to be realized. Nevertheless, ASOS remains confident that sales growth will accelerate in the current half.

Useful links:
1. ASOS Official Website
2. ASOS Sustainability Initiatives