Brexit effect on ASOS sales

Currency opportunities
Currency opportunities

Online fashion firm ASOS will be looked to for any signs of a Brexit blow to retail sales amid concerns that shoppers took a cautious approach to spending on the run-up to the EU referendum.

The group booked a double-digit hike in half-year profits in April, after a bumper festive season helped UK retail sales lift by a quarter to £289.5 million, while international sales were 24% higher at £359.1m.

ASOS, which stands for As Seen On Screen, is expected to continue its strong run, but could see sales pegged back by a slip in consumer spending in the wake of Britain’s vote to leave the European Union.

Retail sales saw lacklustre growth in June, with a balance of +5% of retailers reporting volumes up on this time last year, from +7% in May, according to the pre-referendum Distributive Trades Survey from the CBI.

However, some analysts are predicting ASOS to capitalise on the fall in the value of the pound, as 60% of sales come from overseas. Sterling slumped below $1.28 for the first time since 1985 at one stage on Wednesday and also dropped as low as j1.16.

Peel Hunt analyst Jonathan Pritchard said: “The pound gives ASOS an opportunity to lower global prices.

“This will be done at pace, and management’s expectation is that this will generate a ‘halo’ effect to drive higher sales in the future.”