Asos to pay back government furlough money as sales rise

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2 min read
UKRAINE - 2020/04/25: In this photo illustration an Asos logo is seen displayed on a smartphone. (Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images)
Asos' strong performance during lockdown means it can pay back wages paid to furloughed staff. Photo: Igor Golovniov/SOPA Images/LightRocket via Getty Images

Online fashion retailer Asos (ASC.L) has said it will pay back government furlough money after revealing a rise in sales during lockdown.

Asos said in a trading update on Wednesday that sales rose 10% to £1bn ($1.3bn) in the four months to 30 June. A minor slump in the UK and US was offset by strong sales growth in the EU and the rest of the world.

Sales margins fell by 70 basis points as shoppers stuck at home bought less expensive items. However, the number of active customers rose by 16% to 23 million.

The strong performance means it is in a position to pay back wages paid to staff under the government’s job retention scheme. Around 1,000 Asos employees were placed on the scheme for the month of April, Yahoo Finance UK understands. Asos is understood to be handing back around £1.8m to the Treasury.

“This has been a tough time for all businesses, but we have remained focused on doing the right thing for our people and our customers and making sure that we emerge from the current crisis as a stronger and better organisation,” chief executive Nick Beighton said in a statement. “I am particularly proud of the resilience, flexibility and creativity the Asos team and our business partners have shown.

“Our performance in [the third period] shows that we are delivering against this aim despite the tough economic and social backdrop. We have learnt a lot and adapted quickly, and Asos finishes the period with improved underlying profitability.”

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Asos said profitability for its full financial year was likely to be “towards the top end of market expectations” but Beighton stressed that the company was still treading carefully given the continued uncertainty around COVID-19.

“While we remain cautious about the consumer impact of COVID-19 looking forward, we are on track to deliver strong year-on-year profit growth and to return to positive free cash flow for the full-year,” he said.

Shares jumped 4.7%.