Bumper British Christmas boosts ASOS sales

LONDON Thu Jan 17, 2013 8:54am GMT

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LONDON (Reuters) - British online fashion retailer ASOS said its retail sales rose 41 percent in December, helped by a strong showing in its home market over Christmas.

ASOS, whose celebrity fans include United States First Lady Michelle Obama, said on Thursday its December retail sales were 78.1 million pounds ($125 million), with the more established British operation up a better-than-expected 34 percent and international rising 47 percent.

That compares with a first quarter rise of 30 percent.

While Britain's traditional high street is suffering as consumers worry about jobs and squeezed household incomes, online retailers are faring better.

ASOS, which targets young women looking to emulate the designer looks of celebrities like Nicole Scherzinger and Fearne Cotton, posted international sales of 42.4 million pounds and British sales of 35.7 million pounds.

"This is extremely impressive given the fact that the UK online clothing market, though still growing strongly, is one of the most mature in the world," Panmure Gordon analysts said.

International sales represented 54 percent of the total in December, it said, a lower proportion than the 63 percent seen in its first quarter because of the traditional Christmas uplift in British sales.

"We remain positive in our outlook for 2012/13 as we continue our journey to becoming the number one online fashion destination for twenty-somethings, globally," chief executive Nick Robertson said.

Shares in the group, which have risen 84 percent in the last 12 months, were trading 2.6 percent higher at 2,723 pence at 0819 GMT, valuing the group at about 2.24 billion pounds.

Analyst David Reynolds at Jefferies said it was a "cracking set" of revenue numbers, with the rise in total sales sitting well with an analyst consensus for a 32.1 percent rise in its financial year to the end of August 2013.

But he said the contraction in the group's retail gross margin, down 29 basis points year-on-year, was something to keep an eye on, and with the stock trading at 36 times 2014 forecast earnings, there would be a better time to buy the shares.

"Clearly trading through calendar 2013 will be key: can ASOS maintain the stunning performance in the UK, and is gross margin compression going to be a recurring feature as UK growth pushes on?" ($1 = 0.6252 British pounds)

(Reporting by Paul Sandle, Editing by Kate Holton and Helen Massy-Beresford)

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