Asos lifts first-half profit outlook

(Sharecast News) - Online fashion retailer Asos lifted its profit outlook for the first half on Friday. In a brief update ahead of its first-half results next month, Asos said it expects a "significant" improvement in profitability in H1 despite continued volume deleverage, "following a strong gross margin development driven by lower markdown activity and increased full-price mix, and continued cost discipline".

The company expects revenue growth in line with consensus and adjusted earnings before interest, tax, depreciation and amortisation ahead of consensus estimates.

Consensus expectations are for total sales growth of 13%, adjusted EBITDA of £34m and an adjusted EBITDA margin of 2.6%.

"Encouragingly Asos own brand full-price sales, a core engine of its customer proposition, returned to growth in the first half," it said.

"This was enabled by its market-leading Test & React model, now more than 15% of own-brand sales and growing, ensuring Asos can offer the most exciting product and set the trends for its fashion-loving customers."

Shares in the retailer surged on Thursday after largest shareholder Anders Holch Povlsen upped his stake to just below the level that triggers a mandatory takeover offer.

According to a regulatory filing late on Wednesday, Danish billionaire Povlsen - who is also the second largest shareholder in Zalando and owner of clothing chain Bestseller - upped his stake from 27.1% to just over 28%.

In the UK, when a person or group has acquired 30% or more of a company's voting rights, this triggers an obligation to make a mandatory offer to the remaining shareholders.