Asos surges as online clothing retailer beats summer heat

London

ASOS plc posted stronger-than-estimated pretax profit as Britain's largest online-only fashion retailer posted double-digit sales growth while some of its rivals in retail struggle with volatile weather and digital-first competition. The shares rose as much as 12 per cent in London, the most in more than three years.

Retailers like Asos that produce and sell their own labels continue to beat out rivals dependent on other companies. Unpredictable weather earlier this year caused the likes of Zalando SE to struggle. Companies that market their own brands can switch merchandise more quickly when snow gives way to sunshine.

The company has lost its currency advantage. Asos had benefited from a weak pound since the Brexit vote as it increased sourcing in the UK and expanded sales abroad. With sterling showing signs of life against the US dollar and euro, that benefit has eroded.

While Zalando is finding it harder to boost sales, Asos has managed to balance growth and profitability. The company reiterated its medium-term sales-growth guidance at about 20-25 per cent per year.

Till Tuesday, the shares had fallen 26 per cent this year. Wednesday's bounce brings them back to levels at which they were trading earlier this month. BLOOMBERG