City's flattering ratings for ASOS profit hike

Analysts at the City have backed up strong ASOS first half results with flattering ratings. The online fashion giant reported a double-digit hike in profits hence remaining “right on track” to hit their 1 billion pounds sales target. Improved sales

boosted profits by 11 percent to 25.6 million pounds.

City analysts were bullish on Internet clothing retailer ASOS (LON:ASC) today after it continues to defy the gloom that has engulfed its traditional bricks and mortar counterparts on the High Street.

Underlying profit for the first six months of ASOS financial year was in line with analysts' consensus forecasts and up from 23.1 million pounds in the same period of the 2011-12 year.

International sales account for 61 percent

Despite reporting impressive growth in the UK (up by 26 percent to 137.6 million pounds), retail sales were up 34 percent overall, with the international business thriving. Overseas sales increased 39 percent to 214.7 million pounds - accounting for 61 percent of the total.

"Our international roll out continues and our 1 billion pounds sales ambition for the group is firmly in our sights," said Chief Executive, who remarked that both Chinese and Russian sites are soon to go live. On the downside, profit margin downed by 0.9 percent.

Strong momentum

As ASOS very own chief executive Nick Robertson told investors: “Momentum is strong, and we remain positive in our outlook for 2012/13 as we continue our journey to becoming the number one online fashion destination for twenty-somethings, globally."

In this vein, “ASOS has strong brand recognition amongst its core target customers, a strong value offer due to its disruptive model and is investing heavily in service and fulfilment which should drive long term sustainable growth and share," highlighted analysts at Canaccord Genuity.

They currently have a 'buy' on the stock, and a target price of 3,400 pence. "The establishment of in-country warehouses, web sites and management should drive a significant step change in ASOS’s cash flow generation and earnings profile," they added.

Meanwhile, Panmure Gordon also rates the shares a 'buy' targeting a 4,000 pence price target and says it thinks the shares will see positive momentum. Following this path, Invested put the stress on the current figures, flagging however that they “remain happy buyers although we place our target price under review pending confirmed forecast changes."