Asos expected to reveal sales boosted by purchases after Freedom Day
Online fashion retailer Asos is expected to report slower sales growth this week, as its profit margins are hit by global freight shortages.
The fashion giant saw sales jump during the pandemic as shoppers turned to online stores for comfortable clothes to lock in.
Analysts said they predicted freight shortages, currency movements and less lucrative foreclosure-focused products would have limited the retailer’s full-year profits.
Sales are expected to rise 20% to £ 3.9bn for the year through August, while analysts expect profits to rise 35% to £ 193m.
The retailer reported weakening trade in the final weeks of the four months leading up to June.
However, Russ Mold and Danni Hewson, at AJ Bell, said removing Covid restrictions would likely have resulted in increased sales in recent months.
They said: “Second-hand clothing sales may have offered some margin support as people started to go out again as pubs, clubs and restaurants started to open more fully.”
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said she also suspected “things would have improved in some key markets.”
“More social events on calendars means more outfits to buy.
Profitability has been held back by a higher proportion of less lucrative ‘foreclosure’ items, coupled with higher distribution costs and rising return rates, could mean operating margins are going in the wrong direction direction.”
The retailer has previously stressed that the disruption of its supply chain will not impact consumers
Nick Beighton, CEO of Asos, told reporters in July: “We haven’t changed any of our prices, quite the contrary, we have invested heavily in them and will continue to do so.”