Prices down, stock up: Asos sales rocket

Biggest name online fashion retail, Asos, has taken both the streets and the trading floor by storm, reporting an impressive 41 percent jump in sales during Christmas, or in other words, bucking 78 million pounds. According to both the company

and industry experts, reducing prices has proven to be key for the sales growth at Asos. International sales accounted for the largest piece of the prize, growing 47 percent for the last quarter, while growth in the UK was of 37 percent.

“We acknowledged that prices had probably crept up, while our customers are getting poorer,” said founder and chief executive Nick Robertson, who said cutting prices was the key to its festive flourish, reported ‘Daily Mail’. Their active customers have increased in 40 percent to 5.6 million.

Echoing its peers in high street fashion, Asos benefited from the demand of onesies, which helped sales rise by a bigger-than-expected 34 percent in the UK. Other best-selling trends were bold jewellery and 'baroque'.

The company said the rise in international sales was “fundamental” to its performance, with local language websites in China and Russia a “significant step” in becoming the top retail website for the young and chic globally.

"This is extremely impressive given the fact that the UK online clothing market, though still growing strongly, is one of the most mature in the world," Panmure Gordon analysts said, quoted Reuters.

Analyst David Reynolds at Jefferies said it was a "cracking set" of revenue numbers, with the rise in total sales sitting well with an analyst consensus for a 32.1 percent rise in its financial year to the end of August 2013. He added that the contraction in the group's retail gross margin, down 29 basis points year-on-year, was something to keep an eye on, and with the stock trading at 36 times 2014 forecast earnings, there would be a better time to buy the shares. "Clearly trading through calendar 2013 will be key: can ASOS maintain the stunning performance in the UK, and is gross margin compression going to be a recurring feature as UK growth pushes on.

"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," chief executive Nick Robertson concluded.

The stock has performed strongly in 2012, with shares having raised 84 percent in the last 12 months, currently valuing the group at circa 2.24 billion pounds. Both Investec and Panmure Gordon have 'buy' recommendations on the stock.