Asos grew its customer base in the past year by three million, reaching 23.4 million customers, as well as increased its profits amid the coronavirus pandemic.
Despite the pandemic, online fashion group Asos now has 23.4 million customers, including seven million in the UK, where it makes most of its profits.
The company increased its global sales by 19% while its pre-tax profits surged by a whopping 329% to £142.1 million. The retailer attributed the jump in annual profits to cost-cutting and buyers returning fewer goods.
Being an online retailer, Asos was among the few that have benefitted from the coronavirus lockdowns. While the company said in August that it expected a growth in profits and sales, these numbers are at the higher end of the forecasts.
Item returns declining
Asos pointed out that buying habits had changed to reflect lifestyle changes enforced by the pandemic. As a result, the company observed that customers were buying less special occasion-wear and were purchasing more face products and leisurewear, fewer of which were likely to be returned.
Online retailers like Asos have suffered in the past due to large volumes of returns. In 2019, the company even warned serial returners that they will get blocked.
Uncertain future
However, Asos expressed concern over the possibility of unemployment hitting young customers. The company is particularly worried for those in their 20s, for whom it said life was unlikely to return to normal for "quite some time".
According to Asos chief executive officer (CEO) Nick Beighton, he was expecting a "very promotional" trading period, starting at Halloween. He also warned that the firm may also be impacted greatly by Brexit.
Beighton said: "If there is a Brexit deal with tariffs we would have to suck up a substantial amount of operating cost."
Meanwhile, Hargreaves Lansdown investment analyst Susannah Streeter claimed that Asos was vulnerable in the face of continuing coronavirus restrictions. She argued: "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," Streeter explained.
Additionally, despite the surge in sales and profit margins, the company saw its profit margin fall slightly. Asos is concerned over the outlook for consumer demand.
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."
"I am pleased by the improvements we have made this year but there is still more for us to do to continue our progress," he continued.
The Asos CEO explained: "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."
