ASOS trading statement today highlights UK trading conditions that, at the top line, are trending substantially better than QMGI observations. UK sales across the ytd are running at +35% compared to the +18% QMG observation at the sector level (for UK mail order and internet retailers). Outside of the UK, which QMG data does not capture, revenues have also grown strongly across the ytd with US +25% yoy, EU +45% and RoW +15% (all at constant currency). In all a very impressive group result.
However, the group has flagged that due to a fire at the Barnsley distribution centre, the group lost between GBP25m and GBP30m of sales, which had around a 200bps impact on gross margins. Nevertheless, after insurance recovery, the group still expects PBT to be in line with market expectations – Bloomberg currently shows consensus PBT of GBP46.3m.
We are surprised to see the shares down –13% in early trading on the back of this announcement, especially given the universally positive consensus view. ASC’s top line is growing strongly (indeed, stronger than the broader UK sector according to QMG data) and despite the one-off and unexpected impact of the fire, PBT is still expected to be in line with consensus.
The online retailers in the UK remain a preferred sector for us where top line growth rates are growing at rates well in excess of the traditional high street retail sector.