Asos turnaround shows Covid has been kind to online retailers | Nils Pratley

asos turnaround shows covid has been kind to online retailers nils pratley

It’s amazing now to recall that stock market investors initially thought lockdowns would be bad for online clothing retailers. Shares in Asos roughly halved to £13 during the month of March 2020. They now stand at £53 as business has boomed.

Best of all for shareholders, the company has stopped shooting itself in the foot. Asos over-stretched in 2018 and 2019 by trying to build mega-warehouses in Berlin and Atlanta at the same. It botched both projects, issued three profit warnings in rapid succession, and made outsiders wonder if an impressive revenue line would ever yield solid profits.

An answer seems closer now. The rough tally this financial year is looking like almost £4bn in sales and about £170m in pre-tax profits. If 4%-ish becomes a reliable profit margin, Asos will have shaken off one big investment worry.

The margin triumph is not yet in the bag, it should be added, because trading in the time of Covid yielded a double benefit. Punters did not merely buy more items, they also returned fewer (nobody’s too fussed about the fit of stay-at-home jogging bottoms). There’s also the slight worry that Asos’s 20-something audience is more exposed to a drop in disposable income, where the worst effects may still lie …

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