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19 Mar 2019 | 07:40

Asos sales rise 13% but challenging conditions in France, Germany hamper performance

Online fashion retailer Asos on Tuesday reported an uptick in sales and margins but maintained its previously downgraded guidance on profits as a challenging backdrop in France and Germany continued to dent performance in Europe.

In the three months to 28 February, total revenue rose 13% to £658.5m with retail sales up 13% to £641.3m.

Retail gross margin improved 40 basis points.

The company said it continued to outperform in the UK with sales growth of 14%. Sales in Europe were up 12%, but France and Germany, its two largest markets, continued to be 'challenging.' Its US performance, meanwhile, was behind schedule, which the company blamed on a higher-than-expected demand after its Atlanta warehouse went fully online. This caused a 'significant short-term despatch back log which we have now cleared. These delayed shipments will be recognised in P3 and US trading is now regaining momentum.' The Rest of World segment, meanwhile, returned to good growth of 20% after a disappointing first-quarter. The company left its previously downgraded guidance for 2019 unchanged, with sales growth expected at 15%, retail gross margin to decline by 150 basis, and earnings (EBIT) margin to about 2%. 'Our retail gross margin guidance for the year remains. We will be increasing investment in price and marketing in the second half, particularly in France and Germany,' said Nick Beighton, CEO. 'Given the actions we are taking together with an improving US performance, we believe the Group will deliver stronger growth in the second half. Consequently we remain confident that we will meet guidance for the full year.'

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