Looming jobs crisis casts cloud over Asos despite its profits quadrupling during the pandemic
ASOS quadrupled its profits as it gained 3m customers during the pandemic.
The online retailer estimated that one in every one hundred Zoom calls around the world contained at least one Asos product as its young customers spent their money on ‘laptop dressing’.
Revenues grew 19 per cent to £3.2billion in the year to August 31 which, with tight cost controls, pushed profits up from £33.1million to £142.1million – the top end of expectations.
Covid winner: Asos has seen its profits soar as the closure of stores in lockdown turbo-charged sales for online retailers
But shares fell 10.3 per cent as bosses admitted they were ‘very worried’ that rising unemployment amongst the young will hit business.
Chief executive Nick Beighton said: ‘We’re very worried about unemployment for 20-somethings globally and how their lives will be disrupted in the run up into Christmas.’
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘These are pretty superstar results. The question though is whether these trends will continue in the coming months, as 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.’
Asos has launched a value brand, called As You, with prices ranging from £8 to £28 amid fears over subdued demand as unemployment rises.
The company has 23.4m customers worldwide, including more than 7m in the UK, giving it the confidence to invest £90million over ‘several’ years on a fourth warehouse in the Midlands.
The closure of stores in lockdown turbo-charged sales for online retailers. Customers bought fewer dresses and party shirts as they were not going out, but spent more on comfortable clothes for home, sportswear and outfits for video calls.
It sold 2m hats, men’s jewellery and male grooming products during lockdown, and over the year shifted 32m dresses – almost enough for one per girl or woman in the UK.
The rise in profits enabled Asos to repay £3million of furlough money and a Bank of England loan under the Covid Corporate Financing Facility (CCFF) scheme.