Asos Growth Slows as Weak Australian Dollar Stunts GainsPaul Jarvis
Asos Plc, the U.K.’s largest Internet-only clothing retailer, reported slowing sales growth as the weakness of the Australian dollar stunted gains in one of the company’s main international markets.
Sales rose 38 percent to 335.7 million pounds ($551 million) in the four months through December, the London-based retailer said today in a statement, weakening from 47 percent growth in the previous three months.
The Australian dollar weakened, on average, about 11 percent against sterling in the final four months of 2013, making Asos’s clothes more expensive for customers. Prices in Australia were 13 percent to 15 percent higher, weighing on sales growth, Chief Executive Officer Nick Robertson said by phone. Still, overall business was in line with the company’s expectations, with the U.K. particularly strong, he said.
“Though the impressive U.K. outcome should certainly be seen as reassuring, some people will be fretting about the overseas slowdown,” Nick Bubb, an independent retailing analyst in London, said in a note.
Asos shares fell 6.2 percent to 6,435 pence at 10:48 a.m. in London as Peel Hunt cut its recommendation to hold from buy. The stock has risen more than fivefold since the end of 2011 amid buoyant demand for its online fashions at home and abroad.
“We believe it is appropriate to pause for breath,” John Stevenson, an analyst at Peel Hunt, said in a note. “We remain strong advocates of the Asos growth story.”
About 60 percent of Asos’s revenue now comes from its international division, where sales rose 38 percent in the four-month period, slowing from the previous quarter’s 47 percent growth. Australia is part of the rest of the world region, where growth weakened to 19 percent from 26 percent.
U.K. sales rose 37 percent as the retailer sold more pink vinyl skirts and over-sized coats for Christmas.
Robertson said he’s comfortable with analyst estimates for full-year pretax profit of about 71 million pounds, which would represent growth of about 30 percent on the prior year.
The company will open a new central European distribution center later this year, Robertson said, declining to give more details. Asos is boosting capacity internationally to service a rapidly growing customer base.
The number of active customers was 7.9 million as of Dec. 31, up 41 percent from a year earlier, the company said today.