Bloomberg News

Asos Gains Most Since 2004 as Sales Surge on International

February 01, 2012

(Closes shares in fifth paragraph.)

Jan. 19 (Bloomberg) -- Asos Plc, the U.K.’s second-largest online clothing retailer, rose the most in eight years in London trading after third-quarter retail sales increased 46 percent, helped by growth abroad.

Revenue in the three months ended Dec. 31 rose to 146.5 million pounds ($226 million) from 100 million pounds a year earlier, the London-based company said today. International sales surged 93 percent, leading the shares to jump 18 percent.

Asos has started websites for Australia, Spain and Italy to tap global demand for online fashion and to meet its target of 1 billion pounds of annual revenue by 2015. The company bounced back after a second quarter that trailed analysts’ estimates due to discounting and pressure on spending by younger customers from higher education fees.

“With the business continuing to perform well through these challenging economic times, we remain confident about the outlook and expect our full-year results to be in line with market expectations,” Chief Executive Officer Nick Robertson said in a statement.

Asos closed at 1,760 pence in London, the highest since Sept. 15. The percentage gain was the biggest since March 2004.

In the U.S. and other markets outside the European Union, third-quarter sales more than doubled and the retail gross margin widened 3 percentage points from last year. Group revenue, including postage and packaging income as well as contributions from third parties, jumped 45 percent to 150.5 million pounds, the company said.

iPhone Application

U.K. sales rose 10 percent. That market is still “very challenging” even after revenue accelerated from the 1 percent growth rate in the second quarter, Robertson said in a phone interview. Asos has introduced iPhone and iPad applications to lure its target customers, who are between 16 and 34 years old.

“We are encouraged that the U.K. has returned to more robust levels of sales growth,” wrote Wayne Brown, an analyst at Collins Stewart with a “buy” recommendation. “However, the main engine of growth is international.”

Asos will add marketing teams in Australia and the U.S. within three months to tap growth in those markets, Robertson said. The company is also preparing to start websites in Asia next year, he said.

--Editors: Thomas Mulier, Paul Jarvis

To contact the reporter on this story: Katie Linsell in London at klinsell@bloomberg.net

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net


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