Online retailer ASOS eyes China as profits soar

LONDON (Reuters) - Online fashion firm ASOS Plc (ASOS.L) said entering China was a question of "when not if" as it posted a 41 percent rise in year profit and said it was on track to make 1 billion pounds of sales by 2015.

Chief Executive Nick Robertson said on Thursday China had been identified as ASOS's fifth strategic market after Britain, the United States, France and Germany.

"It (China) will be entered, it's not if but when. It will be a partnership because we can't do it independently. It's part of a strategic play, you've got to think where it would be in 10 years," he told Reuters.

Robertson would not commit to entering China with a local language website in 2011 but promised an update when the firm reports interim results in October. He said the partner would "more than likely" be Chinese.

ASOS, which targets internet-savvy 16 to 34-year-old women looking to emulate the designer looks of celebrities such as Kate Moss, Sienna Miller and Alexa Chung, but at a fraction of the price, posted an underlying pretax profit of 28.6 million pounds in the year to March 31.

That compared with analysts' average forecast of 27.2 million pounds, according to Thomson Reuters I/B/E/S data, and 20.3 million made in 2009/10.

"We remain positive about the outlook for 2012 and remain on track to deliver our ambitious plan of 1 billion pounds of sales by 2015," said Robertson.

Shares in ASOS have more than trebled over the last year, fuelled by buoyant trading and speculation it could attract a bid from firms as diverse as 20.3 percent Danish shareholder and supplier Bestseller, U.S. internet retailer Amazon (AMZN.O) and retailers Marks & Spencer (MKS.L) and Tesco (TSCO.L).

But the stock was down 8.6 percent at 2,138.5 pence at 10:11 a.m., valuing the business at 1.63 billion pounds.

"ASOS is priced for perfection, even though it is hard to see what could go wrong. Even after recent upgrades, the forward P/E (price/earnings ratio) of almost 65 times looks well up with events," said Arden Partners analyst Nick Bubb.

ASOS' revenue increased 52 percent to 339.7 million pounds in the 2010-11 year, with retail sales up 25 percent and international sales up 142 percent, benefiting from the launch of United States, French and German websites.

Websites for Spain, Italy and Australia will be launched in 2011.

While many retailers have struggled against tough macro headwinds, ASOS has prospered, benefiting from a young core customer base and the migration of spending from the high street to the Internet.

The firm has a Facebook store and mobile applications.

"This is about the shopping experience coming to you. That could be via apps, on your mobile, on Facebook," said the CEO.

"This is the next shift in terms of how we perceive shopping online. Rather than websites that you go to I think it becomes much more part of your personalised web experience."

ASOS will not formally update on first quarter trading until mid-July. However, Robertson said the trend was positive.

"Q4 was our biggest quarter, the world hasn't fallen off a cliff since then, so why would anything have changed?" he said, noting robust demand for music festival wear, midi-length dresses, pleats, florals and the Oriental look.

He added that royal wedding favourite Pippa Middleton had also provided a boost.

"She's a great advert for British fashion," he said.

(Editing by Rhys Jones and Jane Merriman)