ASOS raises sales guidance as fast-fashion formula maintains momentum

By Paul Sandle

LONDON (Reuters) - British online retailer ASOS (ASOS.L) raised its growth forecast on Tuesday, saying its combination of new products, competitive prices and improved customer services continues to attract twentysomething shoppers to its site.

Established in 2000, ASOS has become Britain's most valuable online fashion retailer by targeting young consumers with a mix of 85,000 own-label and branded products, adding about 5,000 new styles a week. The business model is backed up by use of social media and investment in technology and ever-faster delivery.

It has repeated the formula internationally, where it says its "modest share" offers the prospect of continued growth despite increased competition from the likes of Amazon (AMZN.O).

The company said it expects sales to rise by 25-30 percent in the financial year from Sept.1, up from the previous 20-25 percent forecast.

The upgrade came after ASOS posted full-year retail sales up 34 percent at 1.88 billion pounds, with adjusted pretax profit rising by 26 percent to 80 million pounds, meeting market forecasts.

Chief Executive Nick Beighton said ASOS had a "great year", in which its active customer base had risen 24 percent to 15.4 million and that the momentum had continued in recent weeks.

"The potential for our company remains huge," he said.

NEW STYLES

ASOS was outperforming a weak clothing market in Britain thanks to its decision to hold prices steady despite inflation caused by a weaker pound, he said. It intends to keep prices flat again this year, he added.

The speed with which it added new clothes to its website also set it apart, Beighton said, with its 5,000 new styles every week being not far off the total range offered by a store on London's Oxford Street.

Sales in Britain increased 16 percent, down from 27 percent growth in 2016, but Beighton said there would be not be another deterioration this year.

"The first six weeks have started well," he said, adding that he was "pretty happy" with the UK growth.

The company is also growing quickly in international markets such as the United States and European Union, where sales rose by 46 percent and 45 percent respectively. For the rest of the world, standout performances in Russia and Israel helped to lift sales by 52 percent.

Shares in the group, which trades at multiple of 59 times 2018 forecast earnings, were up 1 percent at 57.57 pounds at 1055 GMT, valuing the company at 4.8 billion pounds.

ASOS said its growth forecast included a modest foreign exchange hit and a stable operating profit margin of 4 percent.

(Reporting by Paul Sandle; Editing by David Goodman)