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With our economy, employment market and cost of living now at the mercy of Brussels Brexit negotiators – not to mention 27 self-interested European nations – it would appear there is only one sensible course of action: send as much money as possible on “new-gen” denim, cool sweater dresses, spring workwear, power prints for instant “SS17-ness”, a “shacket” (yes, that’s a shirt that doubles as a…), and the bag that goes with everything.
All of these must-(not necessarily)-haves are proving best sellers for Asos, the online fashion retailer that is prime beneficiary of Britain’s mini credit and consumption boom. Its revenues were up 37 per cent, to £911.5m, in the six months to 28 February 2017, or 31 per cent in constant currency terms. As Asos makes more than half of its sales outside the UK, it continues to be boosted by the effects of the weaker pound following the Brexit vote.
International retail sales grew fastest, up 54 per cent, to $548.4m, or 42 per cent without the currency uplift. However, the group’s retail gross margin fell 40bps on the prior year – as it had to keep prices competitive. As Asos prefered to put it:
We further invested into international price coupled with prior year price investments yet to annualise, particularly in the EU. Additionally, investments into our UK A-List loyalty scheme did not annualise until the end of February 2017.
As a result pre-tax profit rose by 14 per cent to £27.3m, and year-end cash came in at £154.3m.
Asos now sees growth continuing, at much the same pace: its has revised its current year guidance upwards in line with its half year performance, and now expects sales growth of 30-35 per cent. This will relent to 20-25 per cent in the medium term. Its capital expenditure guidance remains unchanged at £150-170m for the current financial year.
Chief executive Nick Beighton said:
Customer acquisition, up 29 per cent, takes our active customers to over 14m. We passed the 5m active customer mark in the UK, where we have shown solid sales growth of 18% in a more promotional market.
And, upholding the principles of what makes Britain great, customers are not letting lack of funds stand in their way. Provident Financial – provider of credit to lower-income less-than prime borrowers – reports scope for growth in the UK. Ahead of its capital markets day, it has reported a step-up in new account bookings at its credit card issuer Vanquis Bank. It now sees “a good pipeline of opportunities” to partner with other lenders, brokers and providers of retail finance and has increased Vanquis’s potential customer base from 1.5m-1.8m with an average balance of £1,000 to one of 2.0m-2.3m with an average balance of between £1,000 and £1,100.
In its doorstep credit operation, a shift from part-time self employed agents to full time manages is expected to increase annual profits in the medium term by at least £30m to over £150m, with approximately half this increase derived from cost savings and half derived from sales and collections performance improvements.
And its online offering, Satsuma, now has the potential to grow its receivables book from £18m at the end of 2016 to between £100m and £150m.
Chief executive Peter Crook said:
These plans support an upgrade to the group’s medium-term growth and profit potential which will extend the group’s track record of delivering shareholder value.
But what the great British public is not spending on is… tiles. High street outlet Topps Tiles reports that like-for-like revenues in the 26 week period to April 1 decreased by 1.9 per cent, reflecting “softer market conditions’. Does that mean carpet? Probably not. But Topps argues that it is comparing sales against a stronger period last year when people were rushing to buy and decorate houses ahead of the Stamp Duty changes in April 2016. It now plans to offset these falling sales by cutting operating expenditure, and reckons it can do enough to keep full year profits in line with analyst forecasts.
At least these numbers sound about right. Last year, shares in Topps fell 4 per cent after it revealed it had misstated sales figures in its most recent financial results. It had to admit that, in the first eight weeks of its new financial year, like for-like sales had fallen 0.3 per cent – and not risen 0.8 per cent as it had first stated.
And, finally, Bob Diamond’s shopping list makes a little more sense this morning. Panmure Gordon, which recently accepted a takeover offer involving the former Barclays chief’s vehicle, has announced a return to full-year profits.
Panmure made £1.466m in pre-tax profits in 2016, from a loss of nearly £19m in the previous year, it said. Corporate finance and other fee income rose by over 40 per cent to £18m, while net commission and fee income rose 22 per cent to £28m.
FT Opening Quote, with commentary by Matthew Vincent, is your early Square Mile briefing. You can sign up for the full newsletter here.