January 19, 2012 / 7:25 AM / 7 years ago

UPDATE 2-Sales bounce back at UK fashion retailer ASOS

* Q3 UK retail sales up 10 pct, international up 93 pct

* Retail gross margin up 3 percentage points

* Sees year results in line with market expectations

* Shares up 18 pct

By James Davey and Paul Sandle

LONDON, Jan 19 (Reuters) - British online fashion retailer ASOS bucked the UK retail gloom with sales in the last three months of 2011 bouncing back from a disappointing performance in the previous quarter, it said on Thursday.

“(It) was a bit of a wake-up call, we’d taken our eye off the ball a bit,” Chief Executive Nick Robertson told Reuters.

“So it was kind of like ‘OK guys we can do better than that’, and we did,” he said.

UK retailers generally struggled at Christmas as rising prices, muted wages growth and government austerity measures forced shoppers to rein in spending on more discretionary items.

Those with strong internet businesses fared better, however, as time-pressed consumers took advantage of the convenience, and price transparency, of shopping online.

Robertson noted that on Christmas Day 19 percent of ASOS’s traffic was via a mobile device.

“I would be amazed if somewhere between 20 and 30 percent of our revenue wasn’t (eventually) derived on a global scale off a mobile device,” he said.

Shares in the firm, which targets 16 to 34-year-old women looking to emulate the designer looks of celebrities such as Kate Moss, Alexa Chung and Tulisa Contostavlos but at a fraction of the price, jumped over 18 percent after it said UK retail sales grew 10 percent in the three months to Dec. 31, its fiscal third quarter.

That compared with a consensus market forecast of 5 pct and second-quarter growth of 1 percent.

International sales rose 93 percent, just under-shooting analysts’ consensus forecast of 100 percent and growth of 141 percent in the previous quarter, and now account for 58 percent of the business.

International sales growth had been expected to slow compared with the previous year when they got a boost from ASOS introducing global free shipping.

Total retail sales rose 46 percent to 146.5 million pounds ($226 million), while the retail gross margin increased 3 percentage points, reflecting the greater proportion of higher margin international sales.

Robertson is targeting 1 billion pounds of sales by 2015 at which point overseas sales will be over 90 percent of the total.

ASOS shares hit a 12-month high of 2,508 pence in June, fuelled by buoyant trading and bid speculation, but fell back sharply as the overall market tumbled, directors sold shares and investors fretted about the impact of rising youth unemployment on UK growth.

The stock was up 271 pence at 1,765 pence at 1348 GMT, valuing the business at 1.35 billion pounds.

“We look forward to the prelims (year results in June) when we expect an update on the group’s plans to enter the Asian market, in particular China, which should lead to a re-appraisal of medium to long-term growth targets,” said Collins Stewart analyst Wayne Brown.

Robertson, who owns 10 percent of ASOS’s equity, declined to comment on pre-Christmas reports linking the firm with the head of Marks & Spencer’s clothing and homewares business Kate Bostock.

However, he confirmed ASOS is looking to bolster its top management team.

“In the current climate, where the high street is not faring as well, there’s actually quite a lot of talent who would love to jump ship,” he said.

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