ASOS bucks the trend as global reach expands

The company, which targets internet-savvy 16 to 34-year-old women who want to emulate the designer looks of celebrities such as Kate Moss, Sienna Miller and Alexa Chung but at a fraction of the price, reported a 24 per cent rise in UK sales to £44.9m during its fourth quarter to March 31.

This was up from 23 per cent in the previous quarter.

The international business was the star performer with growth of 161 per cent to £48.4m and ASOS, helped by the introduction of US, French and German websites in October 2010.

ASOS said overseas income overtook UK sales for the first time – accounting for 52 per cent of all turnover.

The group’s shares closed up 14.2 per cent, a rise of 243p to £19.50, as ASOS once again shrugged off the woes hitting its high street rivals.

Shares in ASOS have more than trebled over the last year, fuelled by buoyant trading and speculation the firm could attract a bid from companies as diverse as Danish shareholder and supplier Bestseller, US internet giant Amazon, UK retailers Marks & Spencer and Tesco.

Chief executive Nick Robertson said the group is on schedule and budget to open a £40m state-of-the-art distribution centre in Barnsley next month.

“Barnsley is key to the success of our international expansion and I am pleased to report that this project is on schedule,” he said.

He added that the warehouse, which will help to quadruple the size of the business over the next five years, will have an initial sales capacity of £600m. Fully fitted, it will give the group capacity for over £1bn of sales.

Mr Robertson estimated that up to 1,000 jobs will be created following the opening of the Barnsley site, which will be one of the three biggest retail warehouses in the UK.

The 530,000 sq ft warehouse, at Park Spring Road, in Barnsley, will be three times bigger than ASOS’s warehouse, in Hemel Hempstead, in Hertfordshire, which is to be closed.

The fast-growing firm said retail sales increased 70 per cent to £93.4m in the three months to March 31, its fourth quarter.

This compares with a rise of 59 per cent in its third quarter.

ASOS has enjoyed soaring sales throughout the recent recession.

While many retailers have struggled against tough economic conditions, ASOS has prospered, benefiting from a young core customer base and the migration of spending from the high street to the internet. “We have approached the new financial year with confidence and are excited about the prospects for both our UK and international businesses,” said Mr Robertson.

Retail analyst Nick Bubb at Arden Partners said the UK performance was resilient against a tough consumer market, while he described the firm’s international sales growth as “mind-blowing”.

“We have to take our hats off to ASOS and acknowledge that its burgeoning global expansion is likely to continue to attract a big fan club,” he added.

The update from ASOS suggests the group is on track for another year of double digit profits growth.

It said underlying profits were expected at the higher end of forecasts, which currently range from £24m to £29m. It reported pre-tax profits of £20.3m the previous year.

The strong fourth quarter performance helped overall retail sales rise 58 per cent to £324.8m in the year to March 31.

Its overseas growth is helping to make up for a maturing UK market, which is also more competitive as retailers battle to attract increasingly cautious shoppers.

ASOS, which stands for As Seen On Screen, plans to launch further sites globally this year.

The firm has been launching new initiatives to support UK sales, such as last month’s unveiling of Fashion Finder – a new internet shopping platform that allows consumers to purchase goods from a number of popular high street and internet-only clothing retailers.

The new “ASOS Marketplace” initiative, which allows small boutiques to sell their fashion products to ASOS customers, is also boosting traffic to the site.

ASOS is actively looking for Yorkshire designers to feature in the ‘ASOS Marketplace’ initiative, which will feature boutiques, vintage collectors and designers.

“We are on the hunt for top Yorkshire designers, ” said Mr Robertson. “Following the decision to open our new distribution centre in Barnsley next year, Yorkshire is now our second home. It’s great to support some local talent.”

No plans to put up prices

ASOS has no plans to follow rivals and introduce sharp price increases despite rocketing cotton costs.

ASOS chief executive Nick Robertson said this is because the group is growing so fast that suppliers are keen to secure the improved order levels it can offer.

“Because we’re going back to our suppliers and increasing our orders by 50 per cent, we can negotiate hard on that basis,” he said.

ASOS sells over 50,000 branded and own label products across womenswear, menswear, footwear, accessories, jewellery and beauty with 1,500 new product lines introduced each week.

It attracts over 13 million unique visitors a month and 5.3 million registered users.