Online fashion retailer ASOS will repay the money it claimed under the UK scheme to temporarily lay off workers after a rise in sales during the coronavirus lockdown put it on track to deliver annual profit towards the top end of expectations. 

The company, whose fast fashions are particularly popular with shoppers in their twenties, said its sales rose 10% in the four months to June 30, when store-based rivals had to close shops for weeks due to coronavirus restrictions. 

In April, ASOS raised £247m in new equity to shore up its finances. The furlough repayment is expected to be about £1.8m. 

The group said sales in the four month period reached £1.01 billion, up from £919.8m a year earlier. While UK sales fell 1%, international sales were up 17%, with sales in EU countries particularly strong. 

ASOS said it saw a steady improvement through the period, reflecting increasing warehouse capacity and an underlying improvement in demand. 

Its active customer base increased 16% to 23 million and the number of items sold rose 15%. However, gross margin fell 70 basis points, reflecting strong sales of lower margin products. 

Against the backdrop of social distancing, restrictions on social events and an uncertain economic outlook, ASOS said it remained cautious on the short to medium term outlook on demand. 

Despite that, and costs related to COVID-19 disruptions, it still forecast 2019-20 pretax profit towards the top end of market expectations. 

Before today's update, the top end was £70m, up from the £33.1m made in 2018-19.

"We are on track to deliver strong year-on-year profit growth and to return to positive free cash flow for the full-year," chief executive Nick Beighton said.