Asos gets sales boost on tailor-made prices

Arjun Kharpal, special to CNBC.com
Jonathan Leibson | WireImage | Getty Images

Asos, the online fashion retailer, enjoyed a good summer this year with sales soaring 47 percent in the past three months compared with the same time last year, as the company continues its rapid growth.

Total retail sales for the group were £207.9 million ($335.5 million) driven by strong growth in the UK and abroad, compared to £141 million the year before, with overall group revenues up 46 percent for the quarter to £212 million.

"International growth continues to be driven by the countries in which we have dedicated websites and in-country teams, and was particularly strong in Europe, driven by France, Germany, Italy and Spain. We also saw strong growth in the US and in Russia, following the launch of our Russian website," the ASOS CEO Nick Robertson said in a statement.

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UK retail sales were up 49 percent in the three months up to August 31 while US and EU retail sales increased by 59 percent and 73 percent respectively. This fuelled a 39 percent increase in Asos' yearly revenue, which hit £769 million.

Launched in 2000 as As Seen On Screen Ltd, the company sells own-brand clothing as well as designer fashion. Analysts say the way the company tailors its pricing to target its key audience has been a big factor in its success.

"At one point last year, we saw slowing sales. But the company has had a new lease of life in the UK by cutting prices on their own products, appealing to a core customer base of twentysomethings," Tamara Senders, fashion analyst at Mintel told CNBC.

"They are really starting to feel the pinch and becoming more conscious. So Asos have responded to this and has cut prices and introduced sharper prices."

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Shares in the AIM-listed company were up around 11 percent trading at £53.79 Thursday.

Asos has shown a strong performance on the stock market with shares up 97 percent year to date. Some analysts believe, with a market capitalization of about £4 billion, the company is big enough to list on the FTSE 100.

"Market cap-wise they are big enough to be comfortably be on the FTSE100 if they so desired. But that comes with more expenditure and listing fees," Richard Hunter, head of U.K. equities at Hargreaves Landsdowne told CNBC.

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Asos still has the potential for growth in developed markets, but will need to localize more to sustain strong growth, according to analysts.

"I think they will do a good job opening up dedicated localized sites," Stephen Mader, director of retail insight at Kantar Retail told CNBC.

"They are not going to go incredibly localized because that would be detrimental to what has made them successful up until now. They don't want to tinker with that too much. But localizing is probably going to happen."

—By CNBC's Arjun Kharpal: Follow him on Twitter @ArjunKharpal