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Overseas growth buoys ASOS

RESULTS: Online fashion retailer ASOS is growing fast, helped by an increasing overseas focus - although a hefty share price rating offers little scope for significant upside
October 25, 2012

Following last month’s trading update, figures from fashion retailer, ASOS (ASC), contained few surprises - they were only issued to reflect a change of year-end to end-August. Nonetheless, they do reiterate ASOS’s impressive growth profile.

IC TIP: Hold at 2334p

Adjust for last year's exceptional costs, largely related to a new warehouse in Barnsley, and underlying pro-forma operating profit rose 42 per cent year-on-year to £45.6m. The underlying operating margin rose to 8.25 per cent from 7.95 per cent, too, and active customer number reached 5m, up from 3.7m only12 months ago.

Growth was especially robust in the US where pro-forma retail sales jumped 91 per cent to £49.6m year-on-year after ASOS continued to localise its offering and bolstered investment in digital marketing. A similar heady growth rate was seen in the rest of the world operation - focused on such emerging markets as Russia, China and Singapore and accounting for over 30 per cent of revenues. And by tailoring the product offering on a country basis in the eurozone, ASOS was able to increase site traffic in Germany, France and Italy which helped drive sales in the region up 29 per cent. Progress was slower in the UK where retail sales rose 10 per cent.

Broker Numis Securities expects current year pre-tax profit of £52.5m and EPS of 46.8p (2012: £44.5m and 39.6p).

ASOS (ASC)

ORD PRICE:2,334pMARKET VALUE:£1.9bn
TOUCH:2,330-2,335p12-MONTH HIGH:2,571pLOW: 1,124p
DIVIDEND YIELD:nilPE RATIO:61
NET ASSET VALUE:130p*NET CASH:£27.9m

Year to 31 Aug†Turnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201140312.611.7nil
201255340.038.1nil
% change+37+217+226-

*Includes intangible assets of £23.2m, or 29p a share †Pro-forma figures