Asos profits to beat expectations as returns rate falls

Asos reported that it was benefiting from “stronger than anticipated underlying demand” as well as a “beneficial returns profile” as customers send back fewer purchases.

The etailer now anticipates revenue growth over the year of between 17% and 19% and pre-tax profits to be “in the region of £130m to £150m”.

Asos reported that changing customer behaviour sparked by the Covid pandemic, such as purchases of activewear and more considered shopping, were having a beneficial effect.

The etailer said: “We had expected to see underlying returns normalise once lockdown measures eased and customers were both able to ship returns and felt more comfortable doing so. However, in recent weeks, we have gained better visibility on this pattern in customer behaviour as we have progressed through the returns cycle and it has become evident that returns are not increasing at the rate we originally anticipated.

“As a result, we have seen a significant and sustained reduction in returns rates since April. In part this reflects customer demand for ‘lockdown’ categories, such as activewear and face and body.

“However, rates have been further suppressed below estimated levels by a prolonged shift in customer behaviour towards more deliberate purchasing across all product categories, even when sales momentum has improved.”

Asos said it was uncertain how long such consumption patterns would last and “the extent of this outperformance and any impact beyond this financial year will be driven by how customer shopping behaviour normalises”.

The retailer said it had increased confidence that it would “continue to progress as one of the few truly global leaders in fashion retail”.