UK retailer ASOS sees growth slow in U.S., Australia
By James Davey
LONDON (Reuters) - British online fashion retailer ASOS said growth slowed in the United States and Australia, two key markets, taking the shine off a big jump in Christmas sales.
ASOS, founded in 2000 by current chief executive Nick Robertson, has been a success story in British retailing with its fast-changing fashions appealing to internet-savvy twentysomethings and attracting fans including U.S. First Lady Michelle Obama and singer Rita Ora.
Its shares have more than doubled over the last year, giving it a market value of 5.8 billion pounds ($9.5 billion), only 2 billion pounds less than the 130 year-old Marks & Spencer, Britain's biggest clothing retailer.
However, that high valuation gives ASOS little margin for error and its shares fell as much as 6.1 percent on Tuesday after the company posted sales figures for the first four months of its 2013-14 financial year.
"Though the impressive UK outcome should certainly be seen as reassuring, some people will be fretting about the overseas slowdown," independent retail analyst Nick Bubb said.
ASOS said retail sales rose 38 percent to 335.7 million pounds in the four months to December 31, as the firm cashed in on the big trends of oversized coats, slip dresses and the vinyl, pvc and patent leather look.
That compares with analysts' consensus forecast for growth of 36 percent and 47 percent growth in the fourth quarter of its 2012-13 year.
ASOS's UK sales jumped 37 percent to 133.7 million pounds, with international sales up 38 percent to 202 million pounds.
Sales in Europe were particularly strong with growth of 69 percent. However growth in the U.S. slowed to 28 percent from 59 percent in the previous three months, reflecting a tougher market for clothes aimed at young people.
In ASOS's 2012-13 year, the U.S. contributed about 10 percent of total sales.
"We think we can do better in the U.S., time will tell," Robertson said.
Growth in ASOS's Rest of World (RoW) division, which includes Australia, Russia and China, slowed to 19 percent from 26 percent.
Robertson said the segment was being dragged down by Australia, where the local currency has strengthened against the pound.
"On a like-for-like basis because of the Australian dollar we are about 15 percent more expensive than we were this time last year," he said.
RoW accounted for about 30 percent of total sales last year. ASOS does not break down the performance of individual countries in this segment.
SHIFT ONLINE
ASOS said the retail gross margin rose 90 basis points year-on-year in the period, reflecting tighter stock control.
Industry data published on Thursday showed that while total UK retail sales were up 1.8 percent year-on-year in December, online sales of non-food products grew 19.2 percent, reflecting the speed of the shift in demand from physical stores to the Internet.
Robertson said ASOS's results were also driven by the firm offering better delivery options, such as a next-day service with hourly slots in the UK, and additional payment methods.
Some analysts are concerned about a potential rise in returned purchases and the cost of delivering goods more quickly to ever more demanding shoppers.
Robertson, however, was relaxed. "You've got to remember this is all we do. I'm not trying to juggle investment across a store portfolio and this. Our investment only goes in one place and that's improving the speed and efficiency of getting customers their orders."
He said the company was on track to make 1 billion pounds of sales in the 2013-14 year, one year ahead of target, and is comfortable with analysts' consensus forecast for underlying pretax profit of 71 million pounds, up from 54.7 million pounds in 2012-13.
(Reporting by James Davey; Editing by Erica Billingham)
