Online fashion giant Asos has today revealed sales up 45% as UK sales surged 39% to £64.3m and international revenue rocketed 48% to £129.3m. Retail Week takes a look at analyst opinion.
Asos remains our top pick in the general retail sector – with the most recent proof of its ability to surprise and delight being the tie up with Primark, where, we understand, 20 SKUs should move to 100 in the next few months. Q4 should also benefit from the French mobile site going live (this week) for example. We understand that cash is likely to be in the region of £60m by year end which is around £10m better than we currently forecast. We think consensus may nudge up today – Jean Roche, Panmure Gordon
The performance has been strong across the board, but it is the UK that is likely to stand out with growth of 39% (our estimate 37%, consensus range 15-44%). This is a material acceleration on the 26% growth seen in H1. The comparable is slightly easier than in Q2 at 8% (versus 12%) but the acceleration suggests that Asos initiatives on pricing, product, delivery and digital marketing are working very well. Encouragingly, average basket sizes and order frequency are up in all markets. International sales grew by 48% bang in line with our estimate. The US remains strong, up 59%, EU +56% and RoW +38%- Sanjay Vidyarthi, Espirito Santo
The strong sales performance is likely to have been driven partly by ongoing higher marketing costs – positive for future growth potential but restraining any profit upgrades this year. The UK performance is typically the key driver of Asos shares, and thus despite a strong run we expect the shares to be higher today - Bethany Hocking, Investec
The Q3 trading update from Asos today was expected to show accelerating retail sales growth, from the 38% increase seen in Q2 to 40%-45% growth and the outcome is right at the top of that range, with all regions doing well - Nick Bubb, independent analyst
Its partnership with Primark comes as a testament to Asos’s unfailing ability to surprise and also reflects its considered response to the prevailingly budget-driven nature of consumer culture in Britain. Now planning to use its Barnsley distribution centre instead of establishing one in Russia, the decision to move the launch forward came after Asos’ consumer research revealed that Russian customers would be prepared to wait longer for deliveries. The size of the country means two weeks is a typical lead time. However, by not localising operations, the longer waiting periods and return costs mean that the Russian experience will be nowhere near as seamless as the customer journey in Asos’ other international markets. Nevertheless, Russia remains a big opportunity for Asos and with time the retailer will be able to fine tune its service there - Anusha Couttigane, Conlumino
Asos is now an international trailblazer for ecommerce. The brand continues to reap the rewards of giving its young target consumers the latest fashion trends via convenient channels. The recent tie-up with affordable chain Primark will only help to cement Asos’ dominant position amongst its target demographic. These latest results show the success achievable by conquering international markets. Ecommerce is a global trend and a platform for UK retailers to expand abroad quickly, whilst keeping up to date with the latest consumer habits - Dan Coen, Zolfo Cooper