KEY POINTS

  • ASOS grew revenues by 26% in the year ended August 31.
  • Solid UK retail sales growth drove the company’s top-line performance.
  • The company kept its current year and medium-term guidance unchanged.

FY18 RESULTS

UK online fashion retailer ASOS reported 26% growth in its revenue in the year ended August 31. Revenues marginally surpassed the consensus estimate of £2,408 million, while operating profit was fractionally ahead of consensus. 

CEO Nick Beighton remarked that ASOS had managed to deliver sales and profit growths in line with guidance “whilst investing heavily in the long-term potential of the business.” The retailer invested some £242 million through the year to upgrade its supply chain infrastructure, as well as in data and analytics to improve its digital platform.

UK retail sales proved solid and were up 23% for the year. At constant exchange rates, US retail sales increased by 25%, EU retail sales were up 28% and rest-of-the-world retail sales rose 18%. Gross margins were recorded at 46.1% for the UK, 60.1% for the US, 51.8% for the EU and 53.7% for the rest of the world. The company said that paid fast-delivery options had become more attractive to customers and this helped gross margin expansion. 

Outlook

Management:

  1. expects FY19 reported sales growth of 20%–25%;
  2. expects an FY19 EBIT margin of 4%, constant versus FY18;
  3. maintained capital expenditure guidance of £230–£250 million for FY19; and
  4. expects sales growth of 20%–25% and a 4% EBIT margin over the medium term.

For FY19, analysts expect ASOS to grow revenues by 23.2%, EBIT by 20.5% and GAAP EPS by 20.4%


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