ASOS takes the fashion world by storm

Thursday, 20 January 2011

British online fashion retailer ASOS was the rising star of the day on Wednesday after forecast year profit in line with market expectations after sales growth accelerated in its third quarter. The on-line retailer said on Wednesday its retail sales rose 59 percent to 100.0 million pounds ($160 million) in the three months to Dec. 31.That compares with an increase of 50 percent in its first half.

The firm said UK retail sales increased 23 percent to 56.3 million pounds, while international sales jumped 156 percent to 43.7 million pounds, helped by the introduction of United States, French and German websites in October 2010 and a free global shipping offer in the run up to Christmas. On the other hand, international sales now represent 44 percent of ASOS' sales mix, up from 37 percent in the first half. Positive forecast turned into a 2.49% gain within the FashionUnited Top 100 Index.

Another British quintessential label, Burberry, was the top performer in the FTSE 100 with a 5.3% advance. However, in neighbouring France, the stock that had the biggest fall was fellow in luxury scope, LVMH, which edged down 2.45% to 115.40 euros. In Switzerland Richemont was down to Earth after a frantic Tuesday, dropping by 1.24%.

This week is also bringing the first hints on how the fashion business will be in 2011. Wall Street Equity concludes that despite overall last Christmas season was positive with customer traffic and spending rising over last year, unfortunately for some, the increased spending was not evenly spread among retailers, with some like Chico's FAS Inc. faring well while others trailed behind.

Retailers left bringing up the rear saw sales drop off in December, despite a positive start to the season, and were forced to resort to deep discounts once again. Discounting has been further compounding problems for some apparel stores such as The Talbots Inc. that are already struggling with their margins.

Further to the East, recently released report 'Strong & Steady: 2011 Outlook for the Retail and Consumer Products Sector in Asia', conducted by PwC and the Economist Intelligence Unit, offers an overall outlook for Asian retail sales in positive, with average growth of about 6 percent for 2011 ? 2 or 3 percentage points higher than the global average. Total retail sales are expected to hit more than $8.5 trillion by 2014.

“The challenges of operating in Asia are great, but the opportunities outweigh the challenges. Demand is growing across the board and this will be encouraged not just by rising incomes but also rising access to technology,” said Carrie Yu, China and Asia-Pacific retail and consumer leader at PwC, in the report.

The demand for fashion and apparel in Asia is expected to continue to grow in 2011, with average annual demand growth of about 5 percent through 2014. 2010 also marked a strong rebound for luxury sales in Asia, and prospects are good for 2011. China will be the most important market in Asia and around the world for luxury goods. The China Association of Branding Strategy estimating 250 million in China can now afford to buy luxury goods. China will set the pace for the region, with 14.6 percent growth for 2011 and 12.4 percent in 2012. This is a far cry from Korea’s 2 percent growth forecast for 2011 and 2.4 percent in 2012.

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