Asos share price rises following positive end to 2014

British online fashion retailer Asos ended 2014 on a very positive note, with the Christmas period pushing sales up by 15 per cent in the six weeks to 9 January. 

 

The news caused shares to rise by 7.1 per cent to £26 when markets opened this morning, and they were still performing well in mid-morning.
 

Until last year, Asos was a great success story in the British retailing industry – when it floated in 2001 shares were valued at just 20p, but by February 2014 they had reached £71.95.

 

Things took a turn for the worse halfway through last year, however, as a number of events combined to bring shares steadily down in value.

 

A 42 per cent share price drop in June got the ball rolling, and this was exacerbated by a major fire at its warehouse in Barnsley later in the month. Over the course of the proceeding months, Asos lost almost two thirds of its market value.

 

But in October 2014 things started to pick up again, with sales rising by 27 per cent. The latest results indicate a trend of recovery may be underway, assuaging investor fears.

 

"There is a clear acceleration in momentum, senior management commentary is positive and Asos continues to develop the model well as it puts 2014 to bed," analysts at Jefferies said.

 

Last week, Asos's biggest rival Boohoo issued a profit warning, raising concerns among investors Asos might be about to do the same. 

 

 “After last week’s warning from Boohoo, the City was obviously worried that Asos would also have had a tough time in December in the UK,” Mark Brumby, analyst at Langton Capital, told the FT.

 

“But Asos trumpeting its ‘strong operational performance over peak trading period’ and guidance for the full year in terms of both sales and EBIT [earnings before interest and tax] margin remaining unchanged will reassure investors.”

According to chief executive Nick Robertson, the results offer no surprises. 

 

In short