Asos May Reach 1 Billion-Pound Revenue Goal Early as Sales Surge
Asos Plc (ASC), the U.K.’s largest Internet-only clothing retailer, said it may reach 1 billion pounds ($1.6 billion) in annual sales earlier than its 2015 goal amid booming demand for online fashions.
“It looks like that could be coming a year earlier,” co-founder and Chief Executive Officer Nick Robertson said by phone today after the company reported accelerating revenue growth and said earnings for the year just ended beat analyst estimates.
Asos set the five-year sales target in 2010, when it had annual revenue of 223 million pounds. Analysts expect the London-based company to post sales of 987 million pounds in the 12 months ending August 2014, rising to 1.2 billion pounds the year after, according to data compiled by Bloomberg.
The online retailer is benefiting from buoyant demand both at home and abroad and today reported 47 percent growth in fourth-quarter retail sales to 207.9 million pounds as the number of active customers rose 42 percent from a year earlier to 7.1 million. The median estimate of 13 analysts compiled by Bloomberg was for a 43 percent increase in sales.
“Asos is set for a number of years of rapid growth as a world leading online retailer,” Richard Edwards, an analyst at Citigroup Inc., said in a note today.
Asos rose as much as 522 pence, or 11 percent, to 5,355 pence in London trading and was up 9.5 percent at 5,293 pence as of 10:35 a.m. The gain almost erased a decline in the stock over the previous two days after Morgan Stanley lowered its recommendation on Asos to underweight.
The shares have almost doubled in 2013 after rising more than 10-fold in the previous four years.
The company had a “cracking” U.K. performance in the fourth quarter after lowering prices last year and increasing spending on digital marketing, Robertson said.
Pretax profit for the year ended Aug. 31 will be “marginally” above estimates, according to Asos, which is due to report the earnings Oct. 23. Analysts expect full-year pretax profit of 52.8 million pounds, based on the average of 17 estimates compiled by Bloomberg. The company made 44.5 million before tax and one-time items in the previous 12 months.
International sales accounted for 64 percent of group revenue in the quarter, down from 65 percent a year earlier as the online retailer’s U.K. retail sales rose 49 percent. In Australia, the company has seen a slowdown in the past three months as the exchange rate has made its products there about 20 percent more expensive, Robertson said.
Asos, which sells more than 60,000 branded and own-label products to 241 countries and territories, added a local language website in Russia in May and plans to start a Chinese version later this year.
“The lion’s share of our sales is still going to come from more developed markets in the short to medium-term,” Robertson said.
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