ASOS share price set to soar amid impressive earnings reports

The fast-fashion giant ASOS has seen its share price rally as markets opened on Wednesday, immediately jumping 90 points to 3590 within the first few minutes of trading. The rally comes on the back of an unprecedented winning streak for the company, which has consistently been one of the best performers on the FTSE since the outbreak of the current economic crisis.

The British public's affinity for affordable, quickly-produced loungewear has certainly not waned during the course of the pandemic, as evidenced by the record sales figures that ASOS has reported in the months up to July. Let's take a closer look at the current ASOS share price rally, and see what the long-term prospects are for this young but immensely popular retail company.

A sweet summer for ASOS

Nobody could deny that things were going swimmingly for ASOS prior to the current economic climate. The company posted record annual revenues of over £2.5 billion in 2019, while also increasing its returns to shareholders by 84% in the same year.

However, the past few months have seen unprecedented success for ASOS, pushing its share price ever higher and its market cap to a lifetime high of £3.56 billion. ASOS recently released its July trading statement, which showed that they had increased revenues in the quarter leading up to July by 10%, equivalent to £1.04 billion.

This has helped to lift the ASOS share price further, to the extent that, if you had invested in ASOS shares back in February, you would now be seeing returns of around 220%. The success of ASOS this summer has not come as a surprise to many retail industry pundits.

The lockdown measures have spurred an unprecedented boom in online shopping, with providers of affordable and comfortable loungewear faring better than luxury retailers such as Burberry, which has seen its own share price decimated this summer.

ASOS share price long-term prospects remain rosy

Of course, there is every chance that the ASOS rally is now nearing its peak, but it is clear that long-term confidence in the company's success remains high. For one, ASOS has clearly benefitted from the decline of its scandal-hit competitor Boohoo, which has lost a raft of customers and clients amid revelations about working conditions in its factories.

ASOS, meanwhile, remains in a much stronger position. Retail analysts are expecting sales of female summer wear to skyrocket throughout the rest of July and August, as the UK consumers that make up 35% of ASOS customers return to the bars and beaches.

In addition, ASOS is outperforming competitors in overseas markets. Sales growth in EU and US markets is up by around 20% this year, as the company continues its aggressive push into overseas retail scenes.

The company has also remained reactive throughout recent events, being able to instantly offer different products the second that demand changes as a result of its flexible supply chain. These factors suggest that the ASOS share price rally is far from over.

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1. Create an IG trading account or log in to your existing account
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3. Choose your position size
4. Click on ‘buy’ or ‘sell’ in the deal ticket
5. Confirm the trade