Asos raises £247m in coronavirus fightback

Mass closures of high street shopping outlets have not resulted in a corresponding uplift to online clothing purchases. While overall UK online shopping sales rose 13.7 per cent in March, according to the BDO High Street Sales Tracker, “fashion retailers experienced a substantial drop in demand across all channels”.

Asos has observed a 20-25 per cent decline in sales over the past three weeks. The company said that it was “closely monitoring European sourcing” while disruption to its Chinese product sourcing had been minimal. Asos said that it was taking precautionary measures in its facilities, but warned that “it is impossible to guarantee that we will not experience operational impacts which may constrain our ability to service our market in full”.

The group recorded a 21 per cent boost to retail sales in its half-year results, which was aided by improvements in its EU and US after distribution problems last year. Turnover rose by 20 per cent or more in the UK, EU and US. The company’s pre-tax profits surged to £30.1m from £4m, a first-half record, which was helped by a £5m reduction in restructuring costs, as Asos transitions towards more automation in its European hub.

The retailer nevertheless opted to raise £247m through issuing shares amounting to 18.8 per cent of its share capital. Asos is also on the verge of securing a 12-month extension to its revolving credit facility. At its half year, it had drawn down £172.5m of its existing £350m RCF, and is now looking to add £60m-£80m to its headroom.

Asos’ figures hint at what is likely to come from boohoo’s (BOO) imminent full-year results, due 22 April. Peel Hunt analysts estimate a similar 25 per cent decline in the online retailer’s sales for its most recent quarter and flat growth thereafter, which “barely makes a dent” in boohoo’s net cash position of over £200m.