video Business

ASOS defies spending slump

Thursday, June 02, 2011 - 02:25

June 2 - Online clothing retailer ASOS defies tough consumer conditions in the UK, reporting 41 per cent rise in year profit, but the company's share price plunged amid concerns it is overvalued. Kirsty Basset reports.

▲ Hide Transcript

▶ View Transcript

UK high street retailers continue to face difficult trading conditions - but online, those challenges seem a world away. That's if the results of online fashion retailer ASOS are anything to go by. The company - which targets internet-savvy 16 to 34 year olds who want a celebrity-inspired designer look - but at a fraction of the price - reported a pre-tax profit of 28.6 million pounds. New online stores in the U.S, France and Germany helped generate growth in international sales of142 per cent. ASOS is now planning to expand further this year- into Spain, Italy and Australia. CEO Nick Robertson. (SOUNDBITE) (English) ASOS CEO NICK ROBERTSON SAYING: "The opportunity for us, and the opportunity for ASOS is to exploit the international opportunity and the UK still is only 3 percent of global intenet traffic so a lot of our effort and energies now is about looking for that 20 year old customer but on a global level." Not being constrained by bricks and mortar means ASOS can list 50,000 items for sale on its websites. But going forward, the company is looking at opportunities beyond online. (SOUNDBITE) (English) ASOS CEO NICK ROBERTSON SAYING: "I think the biggest game changer over the next three to four years is going to be mobile and how that impacts and how we access the internet via our smartphones and how retailers can take advantage of that." Matt Piner from retail analysts Verdict says online stores are leading the way in using social media to connect with consumers, but adds that physical stores will always have their advantages. (SOUNDBITE)(English) VERDICT SENIOR RETAIL ANALYST MATT PINER SAYING: "Another thing we're seeing now is retailers trying to make use of technology. So things like apps and so on, websites which can help you superimpose the clothing over a picture of yourself so you can see it in action. But ultimately, it's never going to be to the same level you can get in a store and that is one thing that store based retailers have to capitalise on." Despite the healthy results ASOS shares slipped 10 per cent, as analysts said the full year results didn't justify the company's bloated valuation. Kirsty Basset, Reuters