ASOS out of vogue as sales growth slows?

A slow-down in sales growth - to a 'mere' 38% - sees shares slump at internet retailer Asos.

Last Updated: 06 Nov 2012

Looks as though it’ll take more than a recession to stop young people snapping up trendy clobber – the latest figures released by online fashion retailer Asos show that its sales grew by 38% in the 42 weeks to January 17. However, this wasn’t enough to please glass-half-empty types, who were quick to point out that it falls far short of the 100%-plus increases seen in the previous year – hence why Asos’ share price is down by more than 6% this morning. But we can’t help feeling Asos has become a victim of his own success: growth like that is almost impossible to maintain. And most retailers would kill for figures like these…

By any normal standards, this was another excellent period of trading for Asos (or ‘As Seen On Screen’, as it was originally known). Sales over the Christmas and New Year period jumped by 30% as customers shook off the doom and gloom of the past 18 months to snap up some new party frocks. And it’s not just us Brits with a penchant for cheapo versions of celebrity gear: while UK sales were up 25%, its budding international business notched up growth of 102%. Asos is already going great guns in places like France, Germany, Denmark and Sweden, and hopes to replicate this success on the other side of the Atlantic by launching a US version of the site later this year.

OK, so sceptics argue that 30% growth is a far cry from the 300% growth Asos managed during the festive period in 2008. But Asos reckons this is deliberate: it says that it’s removed incentives like discounts and free delivery because its warehouses couldn’t cope with sales doubling again, despite a recent upgrade (that’s what you call a ‘high-quality problem’). And it has a point: it could end up damaging its brand if it grew too quickly and couldn’t deliver on its promises to customers.

All this snow probably isn’t ideal for Asos – shoppers are probably more inclined to browse from the comfort of their own living rooms, but they may hesitate to order that Cat Deeley-inspired bubble dress just in case the postman can’t get it up the driveway in time for the office party. But generally speaking, Asos still has plenty to smile about: a 38% increase in sales is not to be sniffed at, particularly given the high street’s current woes. Its shares may have sunk today, but with internet shopping set to grow and grow, Asos still looks a good long-term bet.

In today's bulletin:

Britain frets as Wall Street defies Obama with $100bn pay bonanza
140,000 UK firms on the rocks as recession keeps biting
ASOS out of vogue as sales growth slows?
10% of Brits think Steve Jobs is a trade union boss
MT Expert's Ten Top Tips: Learn to roll with the punches

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