Asos womenswear "on fire" as sales soar in second quarter

Asos chief executive Nick Robertson said the category was “on fire” following a slowdown last year when economic conditions worsened.

He said: “12 months ago womenswear was a bit of a drag. We were getting low single digit growth. We’ve tightened the offer and improved the brand mix. [New addition] New Look is on fire on the site right now.”

The sales surge comes as Marks & Spencer is understood to have sufferd a double digit decline in clothing sales over the four weeks to February 17, according to analysts at Nomura.

Asos’s retail gross margin dipped 50 basis points in the second quarter and 60 basis points in the first half due to its investment in lowering prices. The investment will annualise in May.

He added that the price adjustment was “clearly the right thing to do” and had helped drive the 28% leap in UK sales to £75.5m in its second quarter to February 28.

He said he expects margins to improve in its second half, and is guiding a 20 to 40 basis points improvement for the year.

Robertson also said the strong UK performance which did “better than we thought” contributed to the margin dip as its international sales are more profitable because they are taxed less.

The newly-installed in-country teams in France and Germany helped stimulate a “significant” sales boost with revenue up over 100% in those countries, according to Robertson.  Asos plans to have in-country teams when it launches its China and Russia sites later this year.

Robertson said he was expecting another “significant” boost when its US and Australian returns hubs start sending outbound items. He said it would have a “material” effect on its business.

Over the second quarter group sales surged 37% to £186m at the online giant, while overseas revenue, which now represents 59% of overall sales, jumped 45%.

For the half year to February 28, Asos delivered group total sales growth of 34% to £352m with UK sales up 26% to £137.5m.