UK: Asos books 33% in Q4 revenue but UK growth slows
- Q4 group revenue climbed 33% to GBP127.1m (US$206m)
- Retail sales jumped 34% to GBP124.2m
- UK sales edged up 4% to GBP47.1m
- International revenues surged 63% to GBP77m
Online fashion retailer Asos Plc today (26 April) said it was "pleased" with a 33% jump in fourth quarter revenue and that full-year profit is set to be in line with expectations - although analysts greeted the results with mixed reviews.
Group revenue, which includes retail sales, postage and third-party revenues, climbed to GBP127.1m (US$206m) in the three months to 31 March, up from GBP96m last year.
Retail sales jumped 34% to GBP124.2m, with UK sales edging up 4% to GBP47.1m and international revenues surging 63% to GBP77m. International sales now represent 62% of the total, the company said.
For the full year, group revenues jumped 46% to GBP494.9m, up from GBP339.7m a year earlier. Retail sales rose 49% year-on-year to GBP481.6m, with gains of 7% in the UK and 103% in international revenues.
"I am pleased to report a strong fourth quarter performance for both our UK and international businesses, particularly as we annualised against the introduction of Global Free Shipping last year," said CEO Nick Robertson.
"Profit before tax and exceptional items for the full year is expected to be in line with expectations," he noted, adding: "We remain committed to our global expansion plans and approach the new financial year with confidence."
However, the Asos story remains a tale of two halves, according to Neil Saunders, managing director of Conlumino. He notes that UK growth, while "highly respectable", "remains some way below the 10% increase seen in the last quarter and a long way below the 25% rate across the previous financial year.
"A slowdown was always inevitable as Asos matured and reached critical mass and we believe that this level will represent a more typical growth rate going forward.
"However, such growth remains a long way below total UK online fashion sales growth indicating that Asos is losing share. Part of the reason behind this is the intensification of competition in the online fashion with both physical retailers upping internet standards and players like eBay launching their own propositions.
"Against this backdrop Asos will need to work harder on the marketing front and ensure it remains sufficiently differentiated in terms of products and collections."
He also points out that the International "is undoubtedly the star of the Asos show" and "has quite some years to run before it starts to reach maturity."
Analysts at Investec, though, are disappointed with the performance of the International business during the fourth quarter.
A research note says "all three regions are weaker than we expected." It believes a "combination of the macro backdrop and lack of own-country websites is subduing results" in the EU, while in the US "both conversion and average basket size are slightly down."
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