ASOS PLC (AIM:ASC) is holding a Capital Markets Day on Wednesday where it will announce a target of GBP7bn yearly sales over the next three to four years.
It corresponds to annual growth of 15-20% and an underlying earnings (EBIT) margin of at least 4%.
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The online fashion retailer plans to achieve this by adding over GBP1bn of revenue from its own brands, the rollout and expansion of ‘Partner Fulfils’ to represent 5% of gross merchandise value (GMV) and doubling the size of the US and EU arms.
The portfolio of ASOS brands, boosted by the recent acquisition of the Topshop family, is becoming increasingly important as 60% of new customers add at least one of these items to their basket.
The AIM-listed giant plans to improve the offering by boosting availability across partner brands and extend the product choice in new categories such as Sportswear and Face + Body.
Looking at long-term prospects, ‘Partner Fulfils’ could make up for 25% of GMV, while EBIT could be as high as 8% thanks to better efficiency and cost-saving measures.
“Although the growth targets are ambitious, it’s hard to get excited about online retailers these days,” commented Laura Hoy, analyst at Hargreaves Lansdown.
“They’ve enjoyed goldilocks conditions over the past 18 months and a return to normalcy means higher return rates and less incentive to shop online. Add that to supply chain woes and it’s a recipe for near-term volatility.”
Shares rose 3% to 2,654p on Wednesday morning.
