Afterpay Tightens Spending Limits, But Profits Continue To Climb
Despite the COVID-19 pandemic really kicking in across all Afterpay’s markets in March 2020, its average daily global sales were still up roughly 12% on January and February figures.
While underlying sales across all markets were 4% lower in the second half of March than the first half, sales in the first two weeks of April were 10% higher than the latter half of March.
The company said that Australia’s appetite for the annual Afterpay Day sale on 19th-20th March was particularly strong.
In ANZ underlying sales in the third quarter of FY20 rose by 40% year-on-year to $1.5 billion. The number of customers reached 3.2 million, up from 2.6 million a year before.
Although Afterpay’s bottom line has not yet been too impacted by the COVID-19 lockdown, in-store volumes fell by 29% in the second half of March in ANZ, while online sales rose by 8%.
In order to mitigate negative fallout from the COVID-19 pandemic and its impact on the economy and unemployment, Afterpay has said it has tightened spending limits and transaction approval parameters – particularly for high-risk purchases from new and higher-risk customers.
Afterpay has also made the first instalment payment an upfront payment for the majority of customers in Australia, a practice that was already in place in the US and the UK.
In a statement released on the ASX, Afterpay said: “There was an increase in hardship claims in mid-March, but these are now trending down and overall levels remain within manageable portfolio parameters.” The company speculated that government stimulus packages and pre-emptive adjustments may have contributed to this moderation.
In more good news for the company, Afterpay finalised its partnership with eBay Australia on the 3rd of April, providing the company with access to 40,000 SMEs and their customers. The online marketplace has already become one of Afterpay’s top-performing Australian merchants.
Afterpay is now available for most items on eBay.com.au in the $1-1,500 range.
These results come after a tough few weeks for the company. In March Afterpay agreed to issue $1.5 million in refunds to consumers and its share price fell from around $39.00 in mid-February to $8.90 on the 23rd of March. As of the 14th of March this had recovered to $28.40.