TIDMASC
RNS Number : 9073F
ASOS PLC
18 July 2019
18 July 2019
ASOS plc ("the Company")
Trading Statement for the four months ended 30 June 2019
ASOS today announces a trading update for the four months to
30(th) June 2019. Total sales growth in the period was 12%. Sales
in the UK and ROW remained robust but in Europe and US sales were
held back by
operational issues associated with our transformational
warehouse programmes. Whilst we are clear on the root causes, we
now expect the transition issues to continue for the remainder of
the financial year and we are reducing expectations
accordingly.
Four months to 30 June Ten months to 30 June
Reported CCY(2) Reported CCY(2)
GBPm(1) 2019 2018 Increase Increase 2019 2018 Increase Increase
------ ------ ---------- ---------- -------- -------- ---------- ----------
UK retail sales 334.1 288.0 16% 16% 815.6 702.5 16% 16%
EU retail sales 269.0 257.4 5% 3% 671.2 606.5 11% 7%
US retail sales 121.4 108.1 12% 6% 283.0 257.1 10% 5%
ROW retail
sales 169.5 149.2 14% 16% 405.5 367.9 10% 12%
International
retail sales 559.9 514.7 9% 8% 1,359.7 1,231.5 10% 8%
------ ------ ---------- ---------- -------- -------- ---------- ----------
Total retail
sales 894.0 802.7 11% 11% 2,175.3 1,934.0 12% 11%
------ ------ ---------- ---------- -------- -------- ---------- ----------
Total group
revenue(3) 919.8 823.9 12% 11% 2,234.3 1,982.0 13% 11%
------ ------ ---------- ---------- -------- -------- ---------- ----------
(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 include:
-- Total sales grew at +12% on a reported basis and +11% on a constant currency basis
-- Sales in UK & ROW remained robust at +16% and +14% respectively
-- Sales in EU & US held back by warehouse transformation at +5% and +12% respectively
-- Total orders placed 24.8m (+14% YoY)
-- Positive momentum in customer engagement with visits +16% YoY
Revised guidance for FY19:
-- Sales growth broadly in line with performance year to date
-- Retail gross margin c.-250bps
-- PBT GBP30-35m after c.GBP47m transition costs (previously
c.GBP35m) and c.GBP3.5m restructuring costs
-- Capex guidance unchanged at c.GBP200m
-- Year end net debt c.GBP100m (new RCF of GBP350m)
Nick Beighton, CEO, commented:
"Whilst we are making good progress in improving customer
engagement, our recent performance in the EU and US was held back
by operational issues associated with our transformational
warehouse programmes. Embedding the change from the major overhaul
of infrastructure and technology in our US and European warehouses
has taken longer than we had anticipated, impacting our stock
availability, sales and cost base in these regions. Where we have
been unencumbered by these issues we have seen robust growth and
overall our customer momentum is improving with the business
hitting 20m active customers globally for the first time.
We are clear on the root causes of the operational challenges we
have had, are making progress on resolving them, and now expect to
complete these projects by the end of September. Despite these
short-term challenges, the move to a multi-site logistics
infrastructure will enable us to offer customers across the world
our market leading proposition, facilitate our future growth, as
well as leading to longer-term efficiency benefits."
Total group sales for the period were up 12% on a reported basis
and 11% in constant currency. Our UK and ROW territories, which are
serviced by our established automated distribution centre in
Barnsley, continued to trade well. However, growth in the US and EU
was lower than we anticipated, with sales impacted by operational
challenges from our ongoing warehouse transformation programmes in
Berlin and Atlanta. Execution of this programme is progressing,
however the speed of ramp up in our Euro Hub automation and stock
build within our US Hub has been behind our ambitious expectations.
This has restricted product availability and range for our
customers in these territories and we have seen a corresponding
impact on sales as well as additional costs in support of
transition. As a result, whilst visits growth across the group has
shown positive momentum, sales have been held back by availability
where we have seen operational challenges.
Operating Performance
Sales growth of 5% in the EU reflects weaker stock availability
than planned reflecting the challenge of embedding new automation
software in our Euro Hub. Whilst installation of the equipment was
completed in line with plan, we have found challenges in ramp up as
we increased the volume of stock being processed through the
systems. Challenges with the interaction between our automation and
warehouse software meant the expected efficiencies have been
delayed and this has correspondingly impacted availability. As a
result, order growth of 11% lagged visits growth of 19%. Sales were
further impacted by the ASP mix of available product.
US sales growth of 12% was held back by slower than planned
build of branded stock in our Atlanta warehouse with orders and ABV
affected. Third party brands providing product to the US for the
first time proved slower to resolve US specific compliance issues
than we had anticipated and we have not yet received the width of
range from some of our more established brand partners. ASOS
Design, which was not impacted by these issues, grew at a pleasing
26%.
Outside of the regions encumbered by stock availability, sales
have been strong. In UK sales growth of 16% was slightly ahead of
our expectations despite strong competitive and promotional
pressures. Trading within ROW was also robust, supported by a
reactive, locally relevant promo calendar. These territories are
both serviced from our long-established Barnsley warehouse which
was only mildly affected by the changes as it had to service
certain European territories as part of the transition.
Demand Generation
ASOS Design has been a key focus during the period and we have
continued to improve velocity of newness, as set out in April. We
have refreshed and restyled the presentation for customers and have
seen real improvement in run rates where unencumbered by stock
availability, exiting the period at double digit growth. The
velocity of our social media activity and the quality of engagement
with our customers has also improved as we maintain our focus on
relevant and inspirational content, increasingly so in video
format. This has driven a reacceleration in visits, up 16% in the
period and on an increasing trajectory, and stronger customer
metrics. New customer acquisition is recovering, and we are seeing
decreasing churn from our existing customer base.
Building capability
Building on the actions we detailed at our interim results, we
continue to transform our business to equip us to capture the
substantial opportunity ahead. As a part of this, we are in the
process of aligning cost base and support services to ensure they
are appropriately set up for our future growth ambitions. At the
same time we are strengthening our leadership team to ensure we
have the roles and skills in place appropriate for a global
business of increasing scale and complexity.
Outlook
To the end of June, we have absorbed and offset the profit
impact associated with the warehouse transformation issues
encountered in both higher transition costs and lost sales.
However, we now expect the temporary lack of stock availability in
Europe and more limited width in USA to continue to impact growth
levels for the remainder of the financial year which when combined
with extra costs to get our warehouses into a position to operate
at the right capacity and efficiency has led to reduced
expectations for this financial year. As a result, we now expect
sales growth for this financial year to be broadly in line with
year to date performance. The impact of the lower sales, higher
warehouses transition costs and costs associated with
organisational restructuring are set to impact our overall profit
which is now anticipated to be in the range of GBP30m-GBP35m.
Our expectations for capital expenditure remain unchanged at
c.GBP200m for this financial year, but as a result of the reduction
in earnings, capital creditor expectations and working capital
profile we now expect net debt at the year end to be c.GBP100m. We
have finalised a new GBP350m five year revolving credit facility,
ensuring the business has adequate liquidity and headroom in place
to navigate the next stage of growth.
Execution of our transformational logistics programme has been
challenging, but we are clear on the root causes and are moving
decisively to address them. We now expect to complete automation of
the Euro Hub by the end of September, with gradual build to full
targeted stock width in the US by the end of Autumn. Whilst these
issues are short term in nature, we do expect it may take some time
to regain and reactivate any impacted customers. We will provide a
further update at our full year results in October.
We have already begun to see encouraging change from the
corrective actions we set out at our interim results, and are
seeing positive customer momentum as a result. Despite the
short-term issues we have faced, we are confident we are taking the
right actions to ensure we are in the best possible shape to drive
the next phase of global growth for ASOS.
Investor and Analyst conference call:
ASOS will be hosting a conference call for analysts and
investors at 9.30am (UK Time) today. Please dial 08003767922 within
the UK, or +44 (0) 2071 928000 if outside the UK. The conference
call ID is: 1340547.
Participants should dial in 15 minutes 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
Mathew Dunn, Chief Financial Officer
Alison Lygo, Investor Relations
Website: www.asosplc.com/investors
Instinctif Partners Tel: 020 7457 2020
Matthew Smallwood / Justine Warren / Andy
Low
JPMorgan Cazenove Tel: 020 7742 4000
Michael Wentworth-Stanley / Bill Hutchings
/ Caroline Thomlinson
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 85,000 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,
ASOS 4505 and Collusion 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.
ASOS's websites attracted 200.9 million visits during June 2019
(June 2018(1) : 169.1 million) and as at 30 June 2019 it had 20.0
million active customers(2) (30 June 2018: 18.0 million), of which
6.3 million were located in the UK and 13.6 million were located in
our international territories (30 June 2018: 5.8 million in the UK
and 12.2 million internationally).
(1) Restated visits, previously reported number 180 million, (2)
Defined as having shopped in the last twelve months as at 30
June
Appendix 1 - Retail sales growth by period in sterling
Year ending 31 August 2019
2018/19
GBPm P1(1) YOY% P2(1) YOY% P3(1) YOY% P4(1) YOY% YTD YOY%
----- ----- ----- ----- --------
UK retail sales 237.1 19% 244.4 14% 334.1 16% 815.6 16%
EU retail sales 203.8 18% 198.4 12% 269.0 5% 671.2 11%
US retail sales 85.0 13% 76.6 4% 121.4 12% 283.0 10%
ROW retail sales 114.1 (3%) 121.9 20% 169.5 14% 405.5 10%
International
retail sales 402.9 11% 396.9 13% 559.9 9% 1,359.7 10%
----- ---- ----- ---- ----- ---- ----- ---- -------- ----
Total retail sales 640.0 13% 641.3 13% 894.0 11% 2,175.3 12%
----- ---- ----- ---- ----- ---- ----- ---- -------- ----
Year ended 31 August 2018
GBPm P1(1) YOY% P2(1) YOY% P3(1) YOY% P4(1) YOY% 2017/18 YOY%
----- ----- ----- ----- --------
UK retail sales 199.6 214.9 288.0 23% 158.8 29% 861.3 23%
EU retail sales 172.1 177.0 257.4 31% 132.6 34% 739.1 36%
US retail sales 75.2 73.8 108.1 15% 54.5 27% 311.6 19%
ROW retail sales 117.3 101.4 149.2 11% 75.3 20% 443.2 19%
International
retail sales 364.6 352.2 514.7 21% 262.4 28% 1,493.9 27%
----- ---- ----- ---- ----- ---- ----- ---- -------- ----
Total retail sales 564.2 567.1 802.7 22% 421.2 29% 2,355.2 26%
----- ---- ----- ---- ----- ---- ----- ---- -------- ----
(1) Periods are as follows:
P1: three months to 30 November
P2: three months to 28 February
P3: four months to 30 June
P4: two months to 31 August
Appendix 2 - Retail sales growth by period at constant
currency
Year ending 31 August 2019
2018/19
GBPm P1(1) YOY% P2(1) YOY% P3(1) YOY% P4(1) YOY% YTD YOY%
----- ----- ----- ----- --------
UK retail sales 237.1 19% 244.4 14% 334.1 16% 815.6 16%
EU retail sales 203.8 14% 198.4 8% 269.0 3% 671.2 7%
US retail sales 85.0 11% 76.6 (3%) 121.4 6% 283.0 5%
ROW retail sales 114.1 (2%) 121.9 21% 169.5 16% 405.5 12%
International
retail sales 402.9 9% 396.9 9% 559.9 8% 1,359.7 8%
----- ---- ----- ---- ----- ---- ----- ---- -------- ----
Total retail sales 640.0 12% 641.3 11% 894.0 11% 2,175.3 11%
----- ---- ----- ---- ----- ---- ----- ---- -------- ----
Year ended 31 August 2018
GBPm P1(1) YOY% P2(1) YOY% P3(1) YOY% P4(1) YOY% 2017/18 YOY%
----- ----- ----- ----- --------
UK retail sales 199.6 214.9 288.0 23% 158.8 29% 861.3 23%
EU retail sales 172.1 177.0 257.4 23% 132.6 24% 739.1 28%
US retail sales 75.2 73.8 108.1 22% 54.5 29% 311.6 25%
ROW retail sales 117.3 101.4 149.2 11% 75.3 18% 443.2 18%
International
retail sales 364.6 352.2 514.7 19% 262.4 23% 1,493.9 24%
----- ---- ----- ---- ----- ---- ----- ---- -------- ----
Total retail sales 564.2 567.1 802.7 21% 421.2 26% 2,355.2 24%
----- ---- ----- ---- ----- ---- ----- ---- -------- ----
(1) Periods are as follows:
P1: three months to 30 November
P2: three months to 28 February
P3: four months to 30 June
P4: two months to 31 August
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END
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