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Asos shares in fashion after big surge in sales

Looking up: better-than-expected sales in the fourth quarter have led ASOS executives to believe full-year profits will be above expectations.
Looking up: better-than-expected sales in the fourth quarter have led ASOS executives to believe full-year profits will be above expectations.

Shares in online fashion retailer Asos rose 13% after it reported booming customer numbers and surging sales.

The number of shoppers using the brand’s screen-inspired web offering grew to more than seven million during the 12 months to the end of August, a year-on-year increase of 42%.

That success helped prompt a better-than-expected sales spike during the fourth quarter, leading executives to boast that the chain would beat profit expectations.

The brand, targeted at “fashion forward twenty somethings”, saw revenues rise 47% to £208 million during the final three months of the financial year.

It said the number of active customers had grown to 7.1 million, up from five million at the same time last year.

Chief executive Nick Robertson said the excellent summer trading marked a “strong finish to the financial year”, with annual sales up 40% to £754m.

“We expect profit before tax for the year to be marginally above expectations,” he said.

The buoyant performance increases the likelihood of top managers at the firm, including Mr Robertson, sharing in a bonus pot of up to £30m. The payments are dependent on bosses meeting a set of tough sales targets by 2015.

UK retail sales for the latest quarter were up 49% to £74m. International revenues leapt 47% to £134m, including a 73% increase in the European Union.

Asos, which stands for As Seen on Screen, was founded in 2000 to target fashion-conscious young people by trying to emulate the styles of their favourite celebrities.

It is targeting total sales of £1 billion by 2015.

Earlier this year it announced a tie-up with Primark, allowing the budget fashion chain to sell clothes on the internet for the first time.

The firm was hit by a high-profile departure during the summer when the influential former Marks & Spencer executive Kate Bostock walked out of a high-profile role after six months, saying the online retailer wasn’t “the right place” for her.

Panmure Gordon analysts estimated pre-tax profits for the full year were likely to be 2% to 3% ahead of the £52.3m expectation pencilled in by the City.

Wayne Brown, of Canaccord Genuity, said fourth-quarter performance was “well ahead of expectations, with sales accelerating in all core markets”.

Stock in the firm closed the day up 636p at 5,469p, a 15-fold increase on its value since the height of the financial crisis in 2008.