Companies: ASC   

In these troubled times for the retail sector, internet-based fashion retailer ASOS, originally recommended here at 7p in 2004, continues to confound expectations.

In a pre-close update for the year to March, a ‘delighted’ Nick Robertson was able to report a 90% increase in sales to around £81m for the year, adding that pre-tax profits would be ‘significantly’ ahead of market expectations, before a £1.1m one-off charge related to the closure of the group’s old warehouse. He also flagged up a strong start to the current year, with sales for the four weeks to 27 April up 80% year on year.

Listed on AIM since late 2001, ASOS is benefiting from the inexorable rise of online shopping’s popularity – ASOS.com attracts over 2.9m unique visitors every month. Bearing none of the costs associated with a high street presence and lacking ‘sales per square foot’ constrictions, ASOS is a high-margin business whose wares suit young internet-savvy consumers intent on following celebrity fashion. ASOS also attracts shoppers through blogs, soundtracks and rich media videos, which make online shopping an innovative multimedia experience.

Based on forecasts for March 2008, 2009 and 2010 – pre-tax profits of £7m, £12.13m and £17.7m and EPS of 6.53p, 11.23p and 16.3p – ASOS trades on prospective multiples of 46, 27 and 18.4 times. Not cheap, yet given stellar forecast earnings growth rates, not too high a price to pay. Investors yet to book at least partial profits should do so, however. Reduce.

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ASOS	AIM	£205.44m	281.75p	-4.00p
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