ASOS has posted record first-half revenues and profits, but the impact of coronavirus on the most recent three weeks of trading has prompted the UK online fashion retailer to conduct a share sale to shore up its finances, from which it has raised GBP247m (US$306m).
In the six months to 29 February, profit before tax jumped 653% to GBP30.1m (US$32.7m) compared to GBP4m for the same period last year.
Group revenues were 21% higher at GBP1.6bn, with a 20% increase in sales in the UK and a 22% rise in international sales year-on-year.
But its “record half-year performance” has been dampened by the impact on current trading by the coronavirus outbreak.
The retailer says sales fell between 20-25% in the most recent three weeks of trading since containment measures were introduced. Currently, it is monitoring European sourcing but notes the disruption to product sourcing in China is “minimal.”
Asos has taken actions to support its business including keeping its warehouses operational but at a lower capacity. Discretionary costs and CAPEX have been reduced and it has aligned intake according to “demand profile”.
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The retailer this morning (8 April) said it had raised GBP247m through issuing shares amounting to 18.8% of its share capital to protect it against a prolonged downturn and to position itself for long-term growth. The placing price of 1,560 pence represented a slight premium to yesterday’s closing share price of 1,559.5 pence.
“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,” says CEO Nick Beighton.
“Along with other businesses, we have been significantly impacted by the Covid-19 outbreak… We have been focused on keeping our business delivering for customers whilst implementing a series of actions to mitigate the sales impact we have been experiencing. At the same time, we have been working to strengthen our financial position, including reaching agreement with our lenders to provide us with additional short-term financial flexibility.
“The Asos business model provides us with significant resilience and we are encouraged to have seen, across our markets, that where consumers are in lockdown, Asos continues to be an important part of their lives. We have a global platform with the capacity and capability to drive our future growth as demand returns and against that backdrop we are looking to raise incremental equity capital to ensure we have sufficient resources to capitalise on the future whatever it may hold.
“The Covid crisis is clearly going to continue to be tough for everyone and the short-term outlook remains highly uncertain, but the measures we have taken ensure we are able to be clearly focussed on making sure that Asos emerges as a stronger and better business.”
The retailer today also named Patrik Silén as chief strategy officer (CSO), effective 5 May.
Silén was previously a partner at management consultancy McKinsey & Co. His role involved focusing on delivering insight, strategy and transformation programmes to a range of clients, including online pure-plays and omnichannel retailers. As CSO for Asos, Silen will lead the further development and implementation of the company’s strategy with a focus on driving increased performance.
Click here for expert reaction to Asos’ half-year numbers.