The Asos share price is likely to rise today on the back of its solid full-year figures.
The company revealed profit before tax (PBT) of £142.1m, which was at the upper end of their forecast, between £130m and £150m. Sales increased by 19% to £3.26bn, and there was solid growth across all regions. The EU was the best performer as it registered a 22% increase in sales, while the UK, the US and the rest of the world all posted an 18% rise in sales.
Asos share price surges as online retail prospers
Active client numbers now stand at 23.4m, up 3.1m on the year. The group cautioned about uncertainty in the short-term because of the health crisis but it feels that it is well positioned to take advantage of new opportunities because of its recent solid performance. Asos has had a strong start to the new financial year, and it expects to build on its PBT. Some economies are experiencing tougher restrictions but broadly speaking economies are more open now than they were at the start of the summer, and Asos is emerging from the pandemic-stricken environment in a much healthier position than its competitors on the high street.
The online fashion house has performed well in 2020 thanks to the pandemic. The lockdowns had a painful impact on traditional retailers but in turn it channelled more business towards e-commerce companies. Year-to-date, the Asos share price is up 60%, while the FTSE 100 is down 21%.
In mid-July, the company confirmed that group sales in the first four months increased by 10% to £1.01bn. The number of active clients increased by 16% to 23m, and the growth rate was particularly strong for international customers. Companies that continued to operate amid the pandemic typically experienced an increase in overheads – health and safety costs. The e-commerce group announced that it anticipates full year earnings to be at the top end of forecasts, despite the rise in costs. Only a minority of companies issued optimistic outlooks, so the update pushed the Asos share price to a five month high.
Bullish run set to continue
In mid-August, dealers were caught pleasantly surprised as the company issued another bullish update, and it predicted that full year profit will exceed forecasts. The quick series of cheery outlooks boosted the stock.
In early February, the ASOS share price hit a four month high, and then it was caught up in the pandemic-related sell-off. The stock stabilised in early April, and it has been in an uptrend since then. Earlier this month the Asos share price hit a 23-month high, and while it holds above the 5,000p area, the bullish run should continue and it might target 6,000p, while a pullback might find support at the 50-day moving average at 4,912p.