Fashion etailer Asos today reported a surge in retail sales up 37% to £186m in its second quarter as its gross margin dipped. The City reacted positively to the results

“When it comes to innovating its offer, Asos has got it right. Far from reaching saturation, its proposition has proliferated from entry-level own-brand apparel to a fully-comprehensive range of both high street stock and designer brands. By including popular high fashion players such as DKNY, Calvin Klein and Michael Kors in its sales mix, Asos revolutionises fashion retailing by re-conceiving premium brands as fast fashion and putting designer collections and high street names on a level playing field.

“Whilst maintaining its fashionable own-brand range safeguards the entry-level tier of its pricing structure, the premium proposition is a lucrative strategy which tempts customers to trade up. Furthermore, with a mounting offer of premium labels, Asos is well-positioned to compete on a designer level and now qualifies as a worthy opponent to the likes of elite fashion e-tailers Net-a-Porter and Cocosa.” - Anusha Couttigane, Conlumino

“The UK was up 28% and international was up 45%. Given some gross margin pressure and mix issues, full- year profit expectations are unlikely to shift up much and Asos say that things are basically on track. On the 8.15am conference call with analysts, the finance director Nick Beighton said that he now expected the retail gross margin to increase by 20/40 basis points for the year rather than 80/100 basis points and that marketing costs are to rise from around 4% of sales to 5/5.5%. In terms of sales in Q2, he was particularly encouraged by the growth in France and Germany, the biggest two markets in Europe, albeit the USA is well on the way to becoming the biggest market outside the UK.” – Nick Bubb, independent analyst

“Another strong quarter for Asos, with strong momentum in the UK and EU continuing after Christmas. We continue to view Asos as a compelling long-term growth story. However, with EBIT margins held back by continued investment in the service proposition and on-the-ground investment in China and Russia, we would be inclined to take some profits at this juncture, with material profit outperformance likely after 2015 and not before.” - Sanjay Vidyarthi Espirito Santo

“Asos is fast becoming a beacon for British ecommerce. The fashion website has gone from strength to strength as it continues to provide users with innovative and convenient ways to shop while driving fashion trends.

The company continues to choose the channels that are most relevant to its young target market, use innovative technologies to its benefit, and act quickly on key trends to build customer loyalty, boost sales and increase profits.” - Dan Coen, Zolfo Cooper