ASOS benefits from customers making fewer returns
ASOS is predicting that its full year sales and profit will be ahead of expectations after seeing a “sustained and significant” reduction in customer returns since April.
The online fashion retailer now anticipates finishing the current financial year with revenue growth of between 17% and 19% with pre-tax profit coming in at between £130 million and £150 million.
In a statement, ASOS said: “We had expected to see underlying returns normalise once lockdown measures eased and customers were both able to ship returns and felt more comfortable doing so. However, in recent weeks, we have gained better visibility on this pattern in customer behaviour as we have progressed through the returns cycle and it has become evident that returns are not increasing at the rate we originally anticipated.”
The retailer has attributed the decline in returns to a shift in customer behaviour towards “more deliberate purchasing”. It has also seen an increase in customers buying from lockdown categories such as active wear and face and body products.
However, ASOS said the consumer and economic outlook remains uncertain and that it is unclear how long the current shopping behaviour will persist.
It added: “We are providing updated expectations for the current year reflective of this uncertainty. The recent trading dynamics will deliver FY20 sales and PBT ahead of market expectations and further support strong underlying cash generation this year. However, the extent of this outperformance and any impact beyond this financial year will be driven by how customer shopping behaviour normalises.”