Asos plans to extend debt and share placing as Covid-19 hits sales

Total sales at Asos plc grew by 21 percent to 1,597 million pounds (1,967.5 million dollars). The company said in a statement that gross profit increased 17 percent but gross margin declined 170bps versus the prior year. Profit before tax increased 653 percent to 30.1 million pounds (37 million dollars), while basic and diluted earnings per share increased by 667 percent to 27.6p and by 664 percent to 27.5p respectively. The company further said that demand has been significantly impacted since containment measures introduced with group sales down 20 percent to 25 percent in most recent three weeks of trading. The company plans to secure 60-80 million pounds 12-month extension to RCF with covenant adjustments to ensure additional operational flexibility through the crisis and proposes placing of up to 18.8 percent of issued share capital to protect against a prolonged downturn and to position business for long-term growth.

Commenting on the first half trading, Nick Beighton, Asos CEO, said: “Asos had a strong start to the year, making significant progress against the priorities we set out and delivering a better than anticipated first-half performance, driven by the operational improvements we are making to the business. Along with other businesses, we have been significantly impacted by the COVID-19 outbreak, which is clearly going to continue to be tough for everyone and the short-term outlook remains highly uncertain.”

Highlights of first half results at Asos

Asos added that UK retail sales rose by 20 percent in the period, despite an increasingly competitive market with strong participation through Black Friday and the traditional clearance period, which was aided by prolonged cold weather. Total UK customer base grew 10 percent year on year to 6.8 million.

EU retail sales grew 21 percent or 22 percent in constant currency, as operational challenges following Euro Hub automation were resolved before the peak period and stock availability was restored. The company said, traffic growth was strong at 26 percent and ahead of orders growth of 21 percent as conversion stepped back 10bps due to a greater mix of mobile web visitors with lower initial conversion. Active customer growth was 18 percent year on year.

US retail sales grew by 25 percent or 24 percent in constant currency supported by improvements in delivery proposition and more favourable basket economics, while total active customer base grew 19 percent to 3.1 million.

Rest of the World (ROW) retail sales grew by 20 percent in current and constant currency mainly driven by strong participation during Black Friday. ABV increased 6 percent driven by an increase in items per basket and a higher trainer sales mix.

Picture:Asos website