ASOS cashes in on the young pound

by Charlotte Burn-Callander - Tuesday, 18th November 2008 -

On-line fashion retailer ASOS reported an impressive 68 per cent increase in pre-tax profits to £4.1m. Bucking the downward trend on the high street, its sales in the first half of the year have more than doubled to £67.5m.

ASOS now has nearly 700 brands on offer and 19,400 fashion items on sale, up 228 per cent from last year.

The website sells affordable versions of celebrity-inspired outfits that appeal to its largely under-25 customer base. Its young fans relish the variety and relative affordability of the merchandise.

It's a lucrative demographic for the retailer: this age group is the least likely to be hampered by mortgages and childcare. Chief executive Nick Robertson says that younger clients make up 50 per cent of ASOS's 1.88 million registered users and the so-called "young pound" is the key market driving future sales.

In accord with the last recession, Robertson notes that “it was the younger fashion that fared better and the younger demographic that were less likely to be made redundant”.

It has to be said, who else could look good in the fashion item-of-the-moment: unforgiving high shine leggings? ASOS has sold 4,000 of those.

The business is valued at £187m (with share value around 257p), but far from treating itself to a healthy dividend, the £8.9m in cash at the period-end will be invested in the business.

Let’s hope the "young pound" doesn’t get wind of ASOS's prudent thinking, and keeps buying those leggings.