ASOS have dropped quite significantly in the past week for no particular reason and I view this as the perfect opportunity to invest as I can see them bouncing right back up to the 5.50p mark in the next 2-3 weeks. STRONG BUY!!

Where might it wander to once the cross has been reached and breached I wonder?

Golden Cross possibly Monday, definitely Tuesday, if SP just holds level at 103p.

Need some nice continuing volume to take SP up to and through the all time high to new ground. Looking increasingly likely we will be motoring that way in the run up to Xmas.

sd lets hope so

ASOS, the AIM-listed internet fashion retailer, has reported a first-half pretax profit and said it is optimistic of another 'excellent' year's trading.

For the six months to September 30th the company, which sells cheap versions of celebrity clothes, made a profit before tax and an exceptional item of 269,000 compared to a loss of 44,000 last time.

Pretax profit after an exceptional gain of 570,000, relating to insurance proceeds from the Buncefield oil depot explosion which blew ASOS' warehouse roof off, was 839,000 compared to a loss of 44,000.

ASOS.com sales increased 94% to 15.6m, while group sales rose 91% to 15.9m.

The retailer said the sales increase reflected last year's investment in its buying and merchandising teams and the subsequent increase in the number of products available to 4,000 from 1,500.

The website is aimed at internet savvy 18-34 year olds, ASOS had over 1.1 mln registered users as of November 27th, up from 725,000 at the same point last year.

ASOS has made a good start to the second half with ASOS.com sales up 62% year-on-year for the eight weeks to November 26th.

Prior to today's statement analysts were forecasting a year to end-March 2007 pretax profit of about 3.3 mln stg, up from 1.53 mln stg last time.

Super results. Only downside is that the sales for the recent 8-week period are 'only' up 62%. Prospective pe around 25 - what do you think doggy friend? your tail must be wagging on these results. Share coming onto radar of larger Trusts? An investment share rather than speculators now.

Eric

No response from the sp though which is extremely disappointing.

Eric - from my good friend Donaferentes on the other side - pretty much reflects my views:-

Talking of operating margin, I see the gross margin has fallen from 06H1 48% to 06FY 46.7% to 07H1 43.5%. I guess the increased product range hads brought lower margined goods in with it. Still 43.5% is not bad. Let's hope we can hold it there.

For 07H2 - allowing sales of 24m (to make 40m total for the year) at a gross margin of 42%(?) less overheads of 7m add interest of 50k less tax at 30%, gives net profit after tax of 2,191,000. Add this to H1 net profits of 607k, divided by fully diluted shares in issue of 76m, for a full year EPS of 3.68p, a PE of 28 and a PEG of 0.3.

For 2008 forecasts we could see the following figures:-
Turnover +33% 53.2m
Margin 42%
Overhead 16m (??)
Interest 120k
Tax 30% (will be less due to deferred tax credits and capex allowances)
Net Profit 4,525k
Shares 76.5m
EPS 5.91p
Growth 61%
SP 143p = 40% increase from today's price over the next 12 months
PE 24.3
PEG 0.4 still humble enough to qualify as a growth share a year from now
plus there should be dividends on top adding another 1%(?) return

I look forward to the January statement and 2008 revised brokers' forecasts.

Excellent 'dog'trine according to sd. Effectively, next year is seen as pe of 17 at current price; pe of 24 more likely and therefore an sp of 143p or so. Seems eminently reasonableand a nice little earner. very low risk too as they got by burning their warehouse down with only a blip on trading.

What are your views on new initiatives. The US market must be attractive and not that costly to entry. Depends how ambitious they are. A bit more risk but potentially large returns. Cash generation is good and not much in the way of demand on capital.

Eric

The US has been the grave yard of many a UK retailer - M&S and others. They just can't gear up quick enough to play the vast market low margin game required by retailers there.

On-line e-tailing may niot suffer in the same way, but even if shipping, intermediate warehousing and returns can be got right, there is the whole fashion/taste merchandising thing to get right. America is as foreign as Beijing in many respects.

I'd be just as happy to steer clear and sweat UK followed by possibly entering Europe. If a major move to expand US occurred I might welll sell.

I see your point, sd, but the ASOS formula would appear to be right down the US appetite. Also feel that culturally UK still closer to US. ASC would have none of the investment levels met by the High Street retailers. But we are agreed that a move into another market, same or parallel products, is quite likely. Having said that, it is still early doors for the internet in UK and the potential is a significant proportion of high Street fashion sales.

Eric

Ramblings from another board:-

How come Numis predicts a 15% increase in EPS from 2007 to 2008 followed by compound growth of 59% p.a. for 2 years to 2010 - shurely shome mishtake?

To increase from EPS of 3.4p in 2007 to 10p in 2010 I could see growth pattern of, say, 60% (my own favoured bet moreorless for 2008), 42.5%, 30%. Unless they see a heavy year of investment in new premises/warehousing/staff in 2008 followed by a massive step change in subsequent 2 years.

Anyway EPS of 10p after 3 years compound 43% pa growth for a PEG of 1.0 could sustain a PE of 43 = SP of 430p, more than 4 X today's value - all quite possible if management continue down the golden path they've set out on.

sd- hire american buyers in the states- follow same concept as in the uk- no reason why it would not work

good point rh, still would rather stick to UK knitting until well-profitable.

Agree robin, who would know all about rustling up business. Really need to do the market research. The main problem could be too much success bringing a hunger for cash. But I would have though the model could replicate pretty well over there with the main investments being in buyers and warehousing. Worth looking out for hints from management reports.

Eric

More than hints from the FD in an interview (where was it?) who was very clear that they have ambitions in Europe next and then US - I think in that order.

Europe I see as much better place to be over the next few years whilst we live through the US housing - i.e. consumer - downturn.

US margins are soooo tight, you need deep pockets and a big market penetration to get off the ground.

sd I bow wow to your greater dogacity! Europe it is. Advantage could be one market at a time so less exposure. Plenty of anglophiles around - and nubile young females. Go for it, I say!

Major consideration would be current dollar to pound weakness to expansion to US, I would think?

jj50 Which would make this a good time to invest in US, presumably. Not sure where sd saw that suggestion. Nor have I seen the Amazon idea followed up. I can't see that the entry cost is that great against huge potential returns. Wher would the 'as seen on' idea have greater impact?

If sales from US are intended to be greater than cost of investment over time (I think I've got this right) then a weak dollar won't help us. It's damn nearly 1.97 today - 2 by Xmas, now where have I heard that before!

Yes, EWR and SD, my thoughts were that the clothes would seem expensive to the US consumer if based on UK prices? In other words, Americans don't buy British goods when the dollar is weak.