ASOS cashes in on celebrity culture

Nick Robertson
Nick Robertson
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Online retailer ASOS now has more than five million active customers after smashing expectations with a 15 per cent jump in UK sales yesterday.

Described as an “encouraging” performance by chief executive Nick Robertson, ASOS shares surged 2 per cent as one retail analyst said it was clear the online retailer “still has it” in a fiercely competitive market.

The UK sales figure of £49.8m for the three months to August 31 was better than the 13 per cent rise forecast in the City and the 8 per cent seen in the previous quarter.

ASOS has continued to cash in on the popularity of internet shopping and the interest of celebrity-obsessed twenty-somethings in the clothes that are worn by the stars.

Trading has also picked up in overseas markets such as the United States, where sales grew 65 per cent.

ASOS said it had five million active customers at the end of August, up from 3.7 million a year ago.

Jean Roche, an analyst at Panmure Gordon stockbrokers, said the UK performance was “particularly impressive” and that the company continued to lead the way in the online fashion mar- ket.

She added: “This shows that ASOS still ‘has it’ in the fiercely competitive UK market which is still ASOS’s single most important market, representing 39 per cent of retail sales.”

The retailer continued to grow its margins – albeit at a slower rate than previously – at a time when most of its UK rivals are being forced to discount heavily to drum up trade.

ASOS, which targets young women looking to emulate the designer looks of celebrities like Alexa Chung, Tulisa Contostavlos and Kate Moss, stands for As Seen on Screen and was set up to offer the kind of clothes worn by celebrities, although it has since expanded its offer to include brands such as River Island, Ralph Lauren and its own ranges.

It sells more than 50,000 of its own label products, with 1,500 new lines introduced each week.

International sales grew 42 per cent in the quarter and now account for nearly two-thirds of its total, helped by launching new sites in countries such as Italy, Spain and Australia.

Total group sales for the year to the end of August rose 38 per cent to £537.9m, driving it closer towards its £1bn target.

ASOS said its retail gross margin improved by 70 basis points over the period even though it cut prices.

The firm, which has changed its year end from March to August, said profit for the five months ended August 31 is expected to be in line with City expectations and it is approaching the current year with confidence.

With Britain in recession many retailers have been finding the going tough as disposable incomes are squeezed by government austerity measures and with wages growth not keeping up with rises in prices.

ASOS, with its broad international reach, has successfully bucked the gloom.