Companies: ASC   

Online fashion retailer ASOS achieved a record performance last year despite its website closing for five weeks over Christmas because of the Buncefield fuel depot explosion.

For the year to March sales sprang up 39% to £18.8m, profits before tax and exceptionals by 49% to £1.65m and fully diluted earnings by 47% to 2.2p a share. The highly cash generative website doubled cashflow through the year and topped the coffers up to £3.7m at year-end. No dividend is proposed – yet.

Finance director Jon Kamaluddin contends that the return of customers ‘in droves’ after the five-week closure proves the site’s resilience (it sits second to Next’s online offering). The number of registered users leapt 60% to 960,000 during the year, mainly thanks to advertising and the redesign of the website to resemble the celebrity glossy magazines from which its new customers are drawn. Advertising in such glossies as Heat, Grazia and Vogue attracts the readership to ASOS.com, where they can buy the fashions of the film stars and footballers’ wives they so love to scrutinize.

Kamaluddin says a buying team augmented with heads hunted from the top high street stores of Top Shop and Miss Selfridge has increased the number of lines available on the site from 1,500 to 4,000, about which ASOS emails its clientele twice weekly. Margins were down, however, from 44.9% to 43.8% as the product mix has moved towards lower-margin products. Kamaluddin assures this will recover slightly this year.

Rising costs from head office expansion and newly-outsourced warehousing mean City forecasts for this year and next (because of a rising tax charge) are for earnings of 4p a share from pre-tax profits of around £3.7m in 2006 and £4.2m in 2007. The lofty prospective price-earnings ratio should not put you off what it still a fast-growing stock. Like-for-like sales for the 13 weeks since the year end were 65% ahead of last year – QED. Growth Company Investor recommended the shares at 7p in 2004 and they are still worth holding.

ASOS	AIM	£194.5m	266.75p	-9.25p
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