Online fashion retailer ASOS (ASC) is on trend with investors after an optimistic trading update. Its shares rise 4.6% to 4,498p.
The company has increased total retail sales by an impressive 30% in the four months to 30 June as consumers continue to shop online for clothing, instead of the high street.
ASOS’s retail gross margin has fallen to 180bps compared to 2015 as a result of earlier sales and more price cuts.
This strategy is successful for the online retailer as it encourages more purchases from a wider customer base.
ASOS is consistently growing with 12 million active customers as of 30 June, which is an increase of 24% compared to the prior year.
Analysts at RBC Capital Markets (RBCCM) are positive with an ‘outperform’ rating as sales are beating expectations and highlight the strong performing US market.
The company has expanded its international presence as retail sales rose from £532.7 million in 2015 to £656.5 million in the ten months to June.
Full-year sales growth is estimated at the upper end of the 20-25% range, implying a result ahead of RBCCM’s previous expectations of 21.5%.
The UK is the single largest market for ASOS and posted sales growth of 28% in the third quarter, although it is unclear if trading will be affected by uncertain consumer spending following Brexit.
However, sales in Europe have benefited from recent weakness in the pound and may help if spending in the UK declines.
