Asos Lures Overseas Customers Thanks to Weak Pound

LONDON, United Kingdom — UK online fashion retailer Asos Plc raised its full-year sales forecast after luring customers from Russia to the US with cheaper prices.

The company said international sales grew by 54 percent to £548.4 million ($682.2 million) in the first half, after it reinvested savings from the weaker pound into lowering prices for overseas customers. Asos raised its full-year sales-growth forecast range by 5 percentage points to between 30 percent and 35 percent.

“This is a very strong top-line performance for Asos, particularly when compared with Next’s recent online growth and outlook comments,” Richard Chamberlain, an analyst at RBC, said by email. Next Plc, which operates stores and online shopping, last month said profit would fall for a second consecutive year.

The effort to win business through lower prices did hold back margins, weighing on the shares. Asos was down as much as 4.6 percent in early London trading after posting recent highs, though it’s still up 74 percent over 12 months.

The company’s retail gross margins contracted by 40 basis points, to 47 percent, in the first half. Asos expects to report full-year pretax profit broadly in line with consensus estimates.

While the decline in the pound since the UK voted to leave the European Union hurts retailers that import their wares and sell largely to domestic customers, it’s a boon to Asos because it generates about 62 percent of its sales from overseas customers. The retailer, which sells own-label fashions alongside wares from brands such as Adidas and Ted Baker, has used the currency’s weakness to lower prices for international customers.

By Sam Chambers; editors: Eric Pfanner and Thomas Mulier.