Asos speeds past fast-fashion rivals

Dive Brief:

Asos on Thursday reported retail sales rose 30% on a reported basis and 28% in constant currency to £790.4 million (about $1.1 billion according to current conversion rates) in the fourth quarter. Sales in the U.K. in the period grew 23% to £300.9 million (about $423.5 million) "in a challenging market," according to a company press release.
The U.K.-based fast-fashion retailer also reported that the number of active customers rose 19%, average basket value rose 3%, average order frequency rose 8% and conversions rose by 20 basis points. Total orders placed in the period rose 30% to 20.2 million from the same period last year, spurred in part by the retailer's Try Before You Buy program and Asos Instant same-day delivery, which launched in October.
The company maintained its guidance for the fiscal year, though it’s pushing its full-year capital expenditure expectation to the upper end of its previously indicated range of £200 million-£220 million (about $281 million-$310 million) according to the release.

Dive Insight:

All indications heading into the holiday season were that Asos would do well, and the retailer more than fulfilled expectations. The company called attention in particular to its U.K. performance, but CEO Nick Beighton also noted in a statement that momentum is building internationally.

The number of consumers claiming to have made a purchase rose significantly from the middle of December – almost trebling over six weeks — and the number of Asos' out-of-stocks increased, indicating a higher year-on-year demand, according to a report from brand intelligence firm WGSN. That’s leading WGSN analysts to believe that the retailer has a remarkable edge against its competition.

"As more companies release Christmas trading reports, it’s clear that online is emerging as the real differentiator between the winners and losers," WGSN said in a blog post on the Asos holiday results. "E-commerce is retail’s new battleground and Asos its current leader – a position that we predict is unlikely to change anytime soon, despite younger upstarts such as boohoo.com and Missguided coming to the forefront."

Asos is also beating rivals on average amount spent — 27% higher than its three biggest competitors: Boohoo, Missguided and PrettyLittle Thing. WGSN analysts expect that to increase. "High levels of innovation, relevant brand churn and strategic own brand range launches (including activewear and beauty) will build basket sizes and lift average spend levels, contributing to top line revenue and positioning Asos strongly for the future," according to the note. "What makes Asos a real retailer to watch is its continued investment in its product proposition and supply chain, ensuring it continues to push the right product at the right time – critical when catering to a young, fashion-driven customer base."

Beighton in October declared Asos’s goal to reach £4 billion in net sales. That would double the retailer's current £1.9 billion in sales, seemingly a "tough ask," according to WGSN analysts, but strong growth signals that's now a "very realistic ambition."