British online fashion retailer ASOS (LON:ASOS) on Wednesday reported strong Christmas trading and raised its profit outlook but said post-Brexit tariffs would cost it 15 million pounds ($20.5 million) in its 2020-21 year.
UK retailers, including Marks & Spencer, have complained of issues re-exporting goods to European Union countries since the end of the Brexit transition period on Dec. 31, with tariffs imposed on items not made in the UK.
ASOS has been able to continue selling products on its European websites, largely without incurring tariffs because most are shipped from its warehouse in Berlin.
But even ASOS has not been able to mitigate the impact of all the tariffs.
“We’ve not been able to get every product to go direct to Berlin in every single circumstance,” Chief Executive Nick Beighton told Reuters, noting ASOS deals with 800 third party brands as well as its own brand product.
“Some of the smaller brands have not been able to re-structure to go direct to Berlin rather than Barnsley so there’s still some re-balancing that needs to be done,” he said.
“Over the coming years as they grow we will work to mitigate that cost impact.”
Britain’s Brexit trade deal was billed as preserving its zero-tariff and zero-quota access to the bloc’s single market.
“It isn’t actually a no tariff deal,” said Beighton.
ASOS, which sells fashion aimed at 20-somethings, said group retail sales surpassed its expectations over the four months to Dec. 31, rising 23%.
The group has traded through coronavirus lockdowns while store-based rivals have had to close shops.
It also benefited from fewer products being returned by shoppers during the crisis, as well as investment in product, pricing and marketing.
ASOS forecast 2020-21 pretax profit at the top end of market expectations.
Prior to its update they were in a range of 115 million pounds to 170 million pounds ($157-233 million) versus 142.1 million pounds made in 2019-20.
Shares in ASOS were up 0.3% at 1219 GMT, extending year-on-year gains to 56%.