Asos FY results: what the analysts say
Asos today recorded a 93% jump in pre-tax profit to reach GBP30.3m for the year ended 31 March. Revenue increased 46% to GBP494.9m. Here is a flavour of what leading retail analysts said about Asos' recent performance.
Peel Hunt analyst John Stevenson
"Unusually for Asos, no new initiatives were announced this morning. For FY2013E, we see more international marketing teams on the ground and scope for new own-country websites ahead of China. A strong global online retailer, we reiterate our Buy stance.
Numis analyst Andrew Wade
Impressively this rapid growth was achieved alongside considerable change through the year, including the re-location to the new Barnesley DC (on time and on budget), a new third-party returns hub in Australia, and a replacement of the legacy B&M system. In particular, the Barnsley DC is delivering considerable efficiency gains, with further opportunities to come."
Citi analyst Richard Edwards
"Over the last 12 months the Asos business model has absorbed headwinds from the introduction of free worldwide delivery and a move into new warehouse facilities. From here, we think leverage of the fixed cost base and economies of scale should finance investments in market share gains, driving sustained premium top-line growth, despite recently slower international sales trends."
Singer Capital Markets analyst Matthew McEachran
"To achieve this further growth, additional investment will be made totalling GBP105m over the next three years, equivalent to GBP35m per annum. Around 60% of this investment will be made in technology, with the remaining 40% of the investment to be made in warehousing to handle the expected growth."
"With so much scope to enhance and differentiate the proposition via a new reinvestment phase, we maintain our positive view on future sales and earnings potential and management remain confident about delivering the "1-5-5" strategy".
JP Morgan Cazenove analyst Gillian Hilditch
"Management remains positive in its near-term outlook, particularly with respect to the international opportunity and the ability to re-accelerate growth in the US. It also reiterated its view re the opportunity for operational leverage, which it plans on re-investing in operational growth. The positive tone could provide some comfort around the prospects for the US business, but in our view, it is possible that investors will wait to see a tangible improvement in the trend before becoming more confident, and thus we may see a relatively subdued reaction in the shares today."
Conlumino analyst Simon Chinn
"While sales in the UK are lacklustre by comparison, growth over the last year represents a solid performance considering the challenging market conditions. In the face of heightening competition from other pureplays and physical retailers improving their own online offers, ASOS is under more pressure to remain at the forefront of online fashion in the UK. However ongoing investment in innovation such as incorporating augmented reality into its magazine enabling customers to “Scan to shop” with their mobile devices illustrates that is embracing new technological developments to improve the shopping experience.
"Another area that bodes well for ASOS is that its own label is becoming a more established global fashion brand. While third party brands still remain an important part of its business, ASOS’s own label adds a degree of exclusivity to its product offering, driving customers to its site to seek out the latest ASOS trends. Sales of its own label now account for 55% of total sales. This is likely to grow further as demand for the ASOS brand is even higher internationally."
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