TIDMASC
RNS Number : 6041K
ASOS PLC
17 December 2018
17 December 2018
ASOS plc ("the Company")
Trading Update
ASOS today announces a trading update for the first three months
of the financial year. Although we delivered solid growth in sales
of 14%, we experienced a significant deterioration in the important
trading month of November and conditions remain challenging. As a
result, we have reduced our expectations for the current financial
year. Trading over the first three months of the current financial
year is detailed as follows:
Three months to 30 November
Reported
GBPm(1) 2018 2017 Increase CCY(2) Increase
------ ------ ---------- ----------------
UK retail sales 237.1 199.6 19% 19%
EU retail sales 203.8 172.1 18% 14%
US retail sales 85.0 75.2 13% 11%
ROW retail sales 114.1 117.3 (3%) (2%)
International retail
sales 402.9 364.6 11% 9%
------ ------ ---------- ----------------
Total retail sales 640.0 564.2 13% 12%
------ ------ ---------- ----------------
Total group revenue(3) 656.0 576.7 14% 13%
------ ------ ---------- ----------------
(1) All numbers subject to rounding throughout this document,
(2) Constant currency is calculated to take account of hedged rate
movements on hedged sales and spot rate movements on unhedged
sales, (3) Includes retail sales, delivery receipts and third-party
revenues
Highlights:
-- Total sales grew at +14% on a reported basis and +13% on a constant currency basis
-- Retail gross margin -160bps
-- Total orders placed 17.1m (+16% YoY)
-- Customer engagement: active customers(4) +19%, average
selling price (ASP) -6%, average basket size (ABS) +3%, average
basket value (ABV) -3%, order frequency(5) +5%, conversion
+20bps
Revised guidance for the current financial year to August
2019:
-- Sales growth: c.15% (previously +20-25%)
-- Retail gross margin: c.-150bps (previously flat at 49.9%)
-- EBIT margin: c.2% (previously c.4%)
-- Capital expenditure re-phased down to c.GBP200m
Whilst trading in September and October was broadly in line with
our expectations, November, a very material month for us from both
a sales and cash margin perspective, was significantly behind
expectations. The current backdrop of economic uncertainty across
many of our major markets together with a weakening in consumer
confidence has led to the weakest growth in online clothing sales
in recent years. We have recalibrated our expectations for the
current year accordingly.
(4) Defined as having shopped in the last twelve months as at 30
November, (5) Calculated as last twelve months' total orders
divided by active customers
There has been a high level of discounting and promotional
activity across the market. We have increased our own level of
promotional activity, leading to a higher discount and continued
high clearance mix.
This increased discounting, coupled with the unseasonably warm
weather during the last three months has reduced our ASP which has
not been compensated by higher units per basket. Consequently, ABV
is now lower year on year. This has driven higher variable costs
through both our distribution and warehouse cost lines. All other
operating cost trends remain largely in line with expectations. We
remain in a period of heavy transition costs which this year remain
budgeted at a peak level of c.GBP30m. This drag on our
profitability will decrease during the second half of the current
financial year.
As a consequence of our current trading experience, the
weighting of our H1:H2 profitability will shift from c.30%/70% as
seen in prior years to an even more substantial weighting towards
the second half of the current financial year.
Capital expenditure and Cash
We have reduced capital expenditure for the current year to
c.GBP200m. Capex as a percentage of sales will continue to fall as
previously guided.
We have significant headroom within our existing banking
facilities and continue to anticipate returning to a free cash flow
positive position in FY20.
Whilst we remain in a period of heavy transition costs,
automation of Eurohub2 will continue as planned with efficiencies
accruing towards the end of this financial year. Our US
distribution centre is currently operational and on track to
achieve c.100% local fulfilment during the current financial year.
Automation of the facility will now be re-phased by c.6 months. It
is not anticipated that this will impact sales growth or
distribution cost savings, but it will delay previously anticipated
warehouse cost benefits.
Performance by geography
In the UK, ASOS continues to materially outperform in its home
market with sales growth YTD (1 September through 30 November) of
+19% (cc: 19%), although this has been achieved at the cost of more
promotional activity than initially planned and consumers buying
into lower priced product. Consumer confidence is increasingly
fragile as evidenced by the most recent BRC data (four weeks ended
24 November).
Turning to the EU, sales growth across this segment was +18%
(cc: 14%) YTD. Trading conditions across our two largest markets of
Germany and France, which account for c.60% of EU sales, have
become significantly more challenging, with the performance of
these two countries at +15% YTD. We have however seen some more
encouraging performances across a number of the other EU countries,
particularly those in which we have recently launched more
localised experiences, and the performance of the EU segment
excluding France and Germany is +24% YTD.
Our US performance, at +13% (cc: 11%) YTD, has largely been in
line with our expectations as we have been testing our new
operation in Atlanta as we move to 100% local fulfilment during the
course of the current financial year. Discounting activity over the
Black Friday period was very significant, a trend we did not
follow.
In our ROW segment, our revenue performance has been
significantly behind our expectations with sales YTD -3% (cc: -2%).
The impact of sales misses in this region is more pronounced at the
profit level as this segment has a higher gross margin and a lower
returns rate than the group averages.
Nick Beighton, CEO, commented:
"We achieved 14% sales growth in a difficult market, but in the
light of a significant downturn in November, we think it's prudent
to recalibrate our expectations for the full year. We are taking
all appropriate actions and our ambitions for ASOS have not
changed".
ASOS intends to next update the market on trading on 15 February
2019.
Investor and Analyst conference call:
ASOS will be hosting a conference call for analysts and
investors at 7.30am (UK Time) today. Please dial 0800 376 7922
within the UK, or +44 207 192 8000 if outside the UK. The
conference call ID is: 6199518. Participants should dial in 15 mins
early to avoid any delay in joining the call.
A recording of this conference call will be available on the
ASOS Plc investor centre website later today:
http://www.asosplc.com/investors.aspx
For further information:
ASOS plc Tel: 020 7756 1000
Nick Beighton, Chief Executive Officer
Greg Feehely, Director of Investor Relations
Website: www.asosplc.com/investors
Instinctif Partners Tel: 020 7457 2020
Matthew Smallwood / Justine Warren / Tom
Berger
JPMorgan Cazenove Tel: 020 7742 4000
Michael Wentworth-Stanley / Caroline Thomlinson
/ Bill Hutchings
Numis Securities Tel: 020 7260 1000
Alex Ham / Luke Bordewich / Tom Ballard
Forward looking statements:
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements" (including words such as
"believe", "expect", "estimate", "intend", "anticipate" and words
of similar meaning). By their nature, forward-looking statements
involve risk and uncertainty since they relate to future events and
circumstances, and actual results may, and often do, differ
materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with
respect to future events as at the date of this announcement. Save
as required by applicable law, the Company undertakes no obligation
to publicly revise any forward-looking statements in this
announcement, whether following any change in its expectations or
to reflect events or circumstances after the date of this
announcement.
Background note:
ASOS is a global fashion destination for 20-somethings, selling
all the freshest styles complemented by exclusive content, making
ASOS.com the hub of a thriving fashion community and giving our
audience the confidence to be whoever they want to be. ASOS sells
over 87,000 branded and ASOS Brand products through localised app
and mobile/desktop web experiences, delivering from fulfilment
centres in the UK, US and Europe. ASOS curates a mix of our
in-house designed labels, ASOS DESIGN, ASOS EDITION, ASOS WHITE and
ASOS 4505, with global and local brands sold through our own
channels to deliver a locally relevant offer. Our ground-breaking
propositions help bring our amazing products to almost every
country in the world and we serve customers globally with
increasingly tailored local experiences: relevant languages,
payment methods and delivery and return options. You can currently
shop ASOS in over 200 markets, in eight languages, using an ever
greater number of different payment methods, with hundreds of local
deliveries and returns options from pick up and drop off networks
to Next-Day
Delivery. We aim to give all our global customers a truly
frictionless experience.
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END
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