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Jan 13, 2015
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Online retailer ASOS lifted by 2014 sprint finish

By
Reuters
Published
Jan 13, 2015

LONDON, United Kingdom - British online fashion retailer ASOS ended a difficult 2014 on a high, with strong demand at home lifting its retail sales over the Christmas period and boosting its shares.

ASOS, which lost almost two thirds of its market value last year because of a warehouse fire and three profit warnings, said retail sales in the six weeks to Jan. 9 were up 15 percent, ahead of the 8 percent growth in the three months to Nov. 30.


Shares in the group jumped 9 percent in early trade on Tuesday before settling slightly. At 0858 GMT the shares were up 7.1 percent at 26 pounds.

"There is a clear acceleration in momentum, senior management commentary is positive and ASOS continues to develop the model well as it puts 2014 to bed," analysts at Jefferies said, retaining a "buy" rating.

Until last year ASOS had been the great success story of British retailing and a darling of the stock market, helped by its appeal to internet-savvy twentysomethings and high-profile fans including singer Rita Ora and U.S. First Lady Michelle Obama.

Having floated at 20p in 2001, ASOS shares hit a high of 71.95 pounds last February.

The stock then took a hammering from a slowdown in growth, partly down to the strength of sterling, as well as disruption from investments in warehouses, a fire at its Barnsley depot in northern England in June and the launch of its business in China.

ASOS has responded by lowering prices to reverse slowing sales growth in foreign markets. Its brief trading update on Tuesday showed UK sales up 27 percent while international sales gained 5 percent.

Its retail gross margin was down by about 200 basis points on the previous year, but the group said the improveed international sales showed that lower prices were starting to have the desired effect.

Chief Executive Nick Robertson said trading had been in line with the company's expectations and that guidance for full-year sales and operating margin remained unchanged.

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