// Asos’ sales plummet 25% in the most recent three weeks of trading, since lockdown came into effect
// It also raised £247m through a placing of shares to help it weather the storm of the coronavirus crisis
// For the half-year ending Feb 29, Asos’ pre-tax profit surged 653% to a record £30.1m, sales grew 21% to £1.6bn
Asos has shown that online fashion is not immune to the unprecedented problems in retail due to Covid-19, as it revealed a 25 per cent drop in sales despite record half-year profits.
For the six month period ending February 29, the online fashion retailer said pre-tax profit sky rocketed by 653 per cent year-on-year to a record £30.1 million, and revenue jumped by 21 per cent year-on-year to £1.6 billion.
At home in the UK, Asos said retail sales climbed 20 per cent year-on-year to £577.1 million, while international retail sales surged 22 per cent to £974.3 million.
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While Asos attributed the first-half results to “strong” trading and good progress in reducing non-strategic costs, it warned that the coronavirus outbreak has had a “significant” impact in the current half.
The online-only retailer said group sales have plummeted between 20 per cent and 25 per cent in the most recent three weeks of trading as customers prioritised spending on essentials rather than fashion.
However, in countries where lockdown has been in place for longer, such as Italy, Asos noted that demand has started to improve, with the help of promotional activity, albeit sales remained below pre-pandemic levels.
To help mitigate the financial impact of the pandemic, Asos has reduced discretionary costs and capital expenditure, and added it would make “appropriate” use of government support, such payment deferrals and job retention schemes where available.
Asos also said it had sufficient liquidity under its existing £350 million revolving credit facility.
Despite this, this morning the retailer announced that it raised £247 million through a placing of shares at 1560p each.
The placing price was just above Tuesday’s closing share price of 1559.5p.
Most of the shares, which represent 18.8 per cent of Asos’ issued capital, were placed with existing investors, including majority shareholder Bestseller United, while the board subscribed to a small percentage.
The online fashion retailer also said would extend a £60 million-£80 million credit facility and apply for a corporate financing facility launched by the Bank of England.
Asos said it needed the additional capital to strengthen its balance sheet through the coronavirus crisis and that the cash would allow it to weather the storm if there is no improvement in current trading for at least 18 months.
Asos also highlighted that it has implemented safety measures for workers in its warehouses, after GMB workers union previously accused the company of unsafe practices by not enforcing social distancing rules.
The retailer said there are contingency plans just in case some warehouses are required to be shut, and said most suppliers were operating as normal.
Meanwhile, Asos announced that it has appointed former McKinsey & Company partner Patrik Silén as chief strategy officer.
He will join on May 5, reporting to chief executive Nick Beighton.
“Asos had a strong start to the year, making significant progress against the priorities we set out and delivering a better than anticipated first-half performance, driven by the operational improvements we are making to the business”, Beighton said.
“Along with other businesses, we have been significantly impacted by the Covid-19 outbreak. Our first priority was to quickly put in place the necessary measures to ensure the health and well-being of our people.
“I have been extremely impressed with the pace of change and the flexibility our teams have shown in adopting these new ways of working. I’d like to thank them all for the way they have responded.”
He added: “Since then, we have been focused on keeping our business delivering for customers whilst implementing a series of actions to mitigate the sales impact we have been experiencing.
“At the same time we have been working to strengthen our financial position, including reaching agreement with our lenders to provide us with additional short-term financial flexibility.
“The Asos business model provides us with significant resilience and we are encouraged to have seen, across our markets, that where consumers are in lockdown, Asos continues to be an important part of their lives.
“We have a global platform with the capacity and capability to drive our future growth as demand returns and against that backdrop we are looking to raise incremental equity capital to ensure we have sufficient resources to capitalise on the future whatever it may hold.”