Asos adds three million customers as profits soar amid pandemic

Online fashion group Asos added three million customers in the past year, with annual profits jumping thanks to cost-cutting and buyers returning fewer items amid the pandemic.

It now has 23.4 million customers, with more than seven million in the UK, where it makes the bulk of profits.

Worldwide sales were up 19%, and pre-tax profits 329% at £142.1m, driven partly by fewer returned goods.

But Asos said it was worried about unemployment hitting young customers.

It singled out those in their 20s, for whom it said life was unlikely to return to normal for "quite some time".

The company's chief executive, Nick Beighton, also said he was expecting a "very promotional" trading period, starting at Halloween.

He also warned his company could take a hard hit from Brexit: "If there is a Brexit deal with tariffs we would have to suck up a substantial amount of operating cost."

Susannah Streeter, investment analyst at stockbrokers Hargreaves Lansdown, said the company was vulnerable in the face of continuing coronavirus restrictions: "A depressed economic outlook may push down demand to refresh wardrobes.

"With venues forced to close at 10pm and the Christmas party season cancelled, profits from party wear will be thin. Job prospects are uncertain for its core group of customers in their 20s and so the company will have to be very choosy about the ranges and prices it offers."

Investors had marked the shares down 10% by lunchtime on worries trading could be tougher in the next few months.

Returns fall back

As an online retailer, Asos is one of the few retailers that have benefitted from lockdown.

The company said in August it was expecting to see growth in profits and sales and these figures are at the higher end of the forecasts given then.

It also said buying habits had changed to reflect lifestyle changes enforced by the pandemic, and its customers were buying less special occasion-wear and more face products and leisurewear, fewer of which were likely to be returned.

Like other online players, Asos had struggled with large volumes of returns in the past and had even threatened to block serial returners in 2019.

However, its profit margin dipped slightly and it was cautious over the outlook for consumer demand as it said "economic prospects and lifestyles of 20-somethings remain disrupted" due to the coronavirus crisis.

Nick Beighton said: "After a record first half which saw us make progress in addressing the performance issues of the previous financial year, the second half will always be defined by our response to Covid-19."

He added: "I am pleased by the improvements we have made this year but there is still more for us to do to continue our progress.

"Whilst life for our 20-something customers is unlikely to return to normal for quite some time, Asos will continue to engage, respond and adapt as one of the few truly global leaders in online fashion retail."