Asos suffers slower sales after record year

The recession and slowdown has finally caught up with Asos after the online fashion retailer's meteoric sales growth nearly halved for the quarter to 26 June.

But the e-tailer still posted massive growth in sales and profits for the year to 31 March 2009, bucking the troubled trading of many high-street fashion retailers. The 93 per cent growth in Asos's pre-tax profits to £14.1m for the year to 31 March was boosted by its international expansion and overseas shoppers taking advantage of the weakness of sterling on its UK website. Nick Robertson, the chief executive of Asos, said that its customers, who are primarily 18 to 34 years old, had been hit by unemployment and had started to rein in their spending. "Youth unemployment is not heading in the right direction," he said.

For the 13 weeks to 26 June, Asos delivered sales up by 52 per cent, but this was sharply down from the 95 per cent growth for the same period last year. "Growing at more than 50 per cent is still a remarkable achievement," said Mr Robertson, adding that it was out-growing the market.

The internet research firm Interactive Media in Retail Group said that online clothing sales grew by only 8 per cent in May 2009 – the lowest figures since its survey was launched nine years ago. Mr Robertson said that in the same way it had planned for juggernaut sales in 2008/09, it had expected the significant slowdown this year.

Asos – which attracts 5.4 million unique visitors to its website a month – unveiled a 104 per cent spike in group sales to £165.4m for the year to 31 March. Mr Robertson said its traffic was also being boosted by its decision to offer customers feedback on social networking sites, including Twitter and Facebook.

Over the 12 months, the online fashion retailer grew its international sales by 303 per cent to £32.2m, partly driven by Asos increasing the number of countries it ships to to 58 from 34 over the period. Mr Robertson said that the weakness of the pound had been responsible for about half of the sales growth. International now accounts for 19 per cent of total sales.

The e-tailer now offers 24,700 product options, adding 1,000 new product lines a week. Mr Robertson said Asos is budgeting for total sales growth of about 35 per cent this year. "If I look at the next 12 months from a retailer perspective, I don't think there is anything to jump up and down about at all," he said. During 2009/10, Asos' remuneration committee will implement a new incentive plan for its executive directors and other key employees, although details will not be made public until its annual general meeting.