Asos flags ‘huge’ potential as annual profit jumps 28%

British online fashion retailer Asos narrowly beat forecasts with a 28 per cent rise in 2017/18 profit, maintained guidance for its new financial year and said its potential was "huge".

Asos, which sells fashion aimed at twentysomethings, made a pretax profit of £102 million (€116 million) in the year to August 31st – just ahead of analysts’ average forecast of £101 million (€115 million) and the £80 million (€91 million) made in 2016-17.

Retail sales rose 26 per cent to £2.36 billion (€2.69 billion), in line with guidance issued in July, with growth of 23 per cent in the UK and 27 per cent overseas. Active customers increased 19 per cent.

Moving fast

Asos forecast sales growth of 20-25 per cent for the 2018/19 year and said it expected to grow at that rate for the medium term, with annual capital expenditure of £230-£250 million (€262-€284 million).

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"Asos is moving fast and is as differentiated as ever. The potential for our business is huge," said chief executive Nick Beighton.

Listed on London’s junior AIM market, Asos shares have fallen 26 per cent so far this year. They fell sharply in July after the firm missed analysts’ forecasts for sales growth in the four months to June 30th.

It said it had reined in marketing efforts as it focused on ramping up warehouse space in Germany and the United States.

The stock closed Tuesday at 5,000 pence, valuing the business at £4.2 billion (€4.78 billion).

– Reuters