ASOS

The move to a large new stock warehouse in Barnsley has led to a £7.2m exceptional charge at online fashion retailer ASOS (ASC).

Before taking this into account, ASOS has proved, once again, that it can continue to deliver impressive results. In the six months to September, sales soared 56% to £217.3m, as pre-tax profits jumped 66% to £11.7m. Net cash also soared from £4m to £10.4m.

Last month, ASOS warned that the UK was proving sluggish, and is pulling back its guidance towards flat to single-digit growth in the second half. But chief executive Nick Robertson remains upbeat, predicting that international growth can more than make up for it. Overseas sales jumped 150% to £122m, which now accounts for 58% of sales – in three years this will be nearer 90%.

Growth in the US and Australia has been strong, and new websites to target Brazil and China are planned over the next couple of years. With fashion-conscious overseas buyers favouring its higher-margin own-label products, this augurs well for margins, despite concerns surrounding UK retail spending. ASOS can deliver clothes to the US in two days, so should be able to cope with its existing delivery set-up from the UK.

Early UK sales in June may be to blame for a slump in online traffic over the summer, but this has since recovered. Robertson says that 'the bank of mum and dad is getting tighter' but its audience continues to spend, particularly around pay day. Selling 11 dresses a minute, it's not doing too badly.

ASOS is still targeting sales of £1bn by 2015, a situation that its warehouse should be able to manage. Singer Capital Markets forecasts full-year pre-tax profits of £41m, and EPS of 37.6p. Growth Company Investor placed a sell recommendation on the shares in June at £21.45 on valuation grounds. With the price now much lower, we rate ASOS as a hold.