Asos has said it will repay furlough cash to the Government after it saw sales jump as house-bound shoppers bought more “lockdown products”.
The online retailer said it saw increased demand for these products, which it said includes loungewear and skincare.
Total sales jumped 10% to £1 billion in the four months to the end of June, it told investors on Wednesday.
It said the increase in sales was driven by increased warehouse capacity, an uplift in demand and reduction in returns.
Asos said that customers returned significantly fewer clothes during the period, as people stayed at home.
Nevertheless, the retailer said it remains “cautious” of demand in the short to medium-term amid “the backdrop of continued social distancing, ongoing restrictions of events and an uncertain economic outlook”.
Nick Beighton, chief executive of the company, said: “This has been a tough time for all businesses, but we have remained focused on doing the right thing for our people and our customers and making sure that we emerge from the current crisis as a stronger and better organisation.
“We have learnt a lot and adapted quickly, and Asos finishes the period with improved underlying profitability.
“While we remain cautious about the consumer impact of Covid-19 looking forward, we are on track to deliver strong year-on-year profit growth and to return to positive free cash flow for the full-year.”
Asos said UK sales fell 1% over the period as it was boosted by 22% revenue growth across its EU regions.
William Ryder, equity analyst at Hargreaves Lansdown, said: “Asos customers have adapted to lockdown life by buying fewer dresses and more casual and active clothes.
“This has allowed the group to keep selling but has come at the cost of gross margins and growth has only really shone in regions where the lockdown has been relaxed.
“Costs have also risen as warehouses were adapted for social distancing, but overall Asos expects profitability to rise as marketing and promotional activity continues to be cut.”
Shares in Asos were 3.8% higher at 3,500p in early trading on Wednesday.