ASOS results could signal Brexit effect on sales

ASOS results could signal Brexit effect on sales

Online fashion firm ASOS will be looked to for any signs of a Brexit blow to retail sales amid concerns that shoppers took a cautious approach to spending in the run-up to the EU referendum.

The group booked a double-digit hike in half-year profits in April, after a bumper festive season helped UK retail sales lift by a quarter to £289.5m, while international sales were 24% higher at £359.1m.

ASOS, which stands for As Seen On Screen, is expected to continue its strong run, but could see sales pegged back by a slip in consumer spending in the wake of Britain's vote to leave the European Union.

Retail sales saw lacklustre growth in June, with a balance of +5% of retailers reporting volumes up on this time last year, from +7% in May, according to the pre-referendum Distributive Trades Survey from the CBI.

However, some analysts are predicting ASOS to capitalise on the fall in the value of the pound, as 60% of its customers and sales come from overseas.

Sterling slumped below 1.28 US dollars for the first time since 1985 at one stage on Wednesday and also dropped as low as 1.16 euro.

Peel Hunt analyst Jonathan Pritchard said: "The pound gives ASOS an opportunity to lower global prices.

"This will be done at pace, and management's expectation is that this will generate a 'halo' effect to drive higher sales in the future."

The group's managers are also eyeing hefty sales targets of £1bn in the UK, £1bn in Europe and £700m the United States.

It comes after the retailer announced in April that it was ditching its Chinese arm, with its half-year results pointing to £1m in losses from the venture. It previously said it would take a £10 m hit from the closure of the operation.

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