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!!

EW Robson

Thanks for the info from the Hoodless note. In terms of valuation they are right to say that the forward PE looks demanding based on Seymour Pierce's current estimate of 1.36m PBT for the year to 31st March 04. What I would point out is that this estimate is, by the broker's own admission, conservative. ASOS delivered sales growth of 83% for Q1 (April - June 04) vs SP's forecast for the year of, I think, 45%. While comparisons will get progressively tougher following last years strong growth, the most recent evidence is that growth has accelerated if anything (average monthly sales, registered users, average basket etc). Q2 saw a number of important marketing iniatives such as the placement of inlay cards in every Girls Aloud CD single, and every single CD WOW product delivered to the UK mainland. ASOS also is one of only 6 merchants selected by HSBC as part of their student current account offer. A couple of days ago the ASOS affiliate manager announced partnerships with US and European affiliates as part of their "soft" launch into new territories. Given that the ASOS affiliate program was recently voted No.1 by UK affiliates and accounts for 25-30% of the company's sales, this is good news.

Most importantly, the trading statement on September 15th should include details of a major new plank of the group's strategy which should help it further differentiate its offering and further improve margins - ASOS are set to launch their own clothing line of "as seen on" products. By sourcing direct rather than from London's wholesale markets, and with the buying scale they now have, ASOS are in a strong position to become the destination for celebrity inspired fashion.

I would also say that comparing valuation ratios with mature high street retailers is an innapropriate tool. ASOS is largely immune from many of the buying/seasonal risks faced by high street ranges (because they can change their ranges almost immediately if they are not selling). The threat of a slow down in consumer confidence caused by rising interest rates and a slowdown in the housing market is also likely to affect ASOS much less than the high street because of the demographic of its core customer base - teenage girls.

BH

Excellent note. I think you are spot on.When you view the potential, which seems to be increasing all the time,I do not see a 1 as a target price anymore. ASOS look a good long term prospect, it is after all trading in the way the world is doing business in the new millenium and especially the teenagers - who lets face it have ther money to spend and specifically like to spend it on the products ASOS are marketing!It has to peak at some time , but that point could be way off in the future

I have enjoyed the excellent notes posted today - very encouraging! As a new entrant to the trading game I bought ASOS right at the end of July @58p. August was a scary month! I am still in there though and now at break-even which is a relief.(Two other stocks (DES and JKX)I bought at the same time obviously think its funny to try the same thing...)
Below is a copy of a report on ASOS which appeared in The Momentum Investor Stockmarket Newsletter this month. It makes encouraging reading and it will be interesting to see how the market reacts to the AGM and trading statememt next week. It is very much in line with the other positive postings above. The newsletter recommends this stock as "worth watching". I agree, to my mind there is only one direction it is heading on the back of all this news which is North.

Over the month (August) we met up with Nick Robertson, chief executive of ASOS, a fast growing on-line retailer of fashionable ladies clothing in famous celebrities, at its head office in central London. We first highlighted ASOS in May when the price was 21.5p and in an apparent flashback to the wild dot com days the shares have spiked almost vertically to a high of 68p before the recent pull back. This euphoria partly reflects the fact that it has reached the nirvana like state that all e-tailers dream about, where breakeven has been passed and with operational infrastructure in place, a large proportion of future sales increases will fall straight to the bottom line. Latest forecasts from broker Seymour Pierce, bear this out with ASOS pre-tax profit expected to triple to 2m in the next two years. But ASOS market value of 36m still doesnt fully reflect the growth opportunities, with independent market research group, IMRG, predicting that clothing will account for 1.2 billion of on-line sales this year.
ASOS is now moving its back-end logistical functions to a new warehouse of over 20,000 square feet while a further move to a much larger place is planned next year. ASOS is now a picture of rude financial health. Full results for the 15 months to 31/3/2004 showed sales rising 84% to 7.5m triggering a first time pre-tax profit of 0.6m and earnings of 1.2p. Thanks to a strong cash inflow of 1.1m ASOS is now in its strongest ever financial position with net cash balances of 1m.
ASOS improved financial resources have been put to good use with Robertson recruiting two buyers in March from TK Maxx and Bentalls to take the group into menswear and accessories respectively and this was quickly followed by the appointment of a jewellery buyer in June. A new health and beauty buyer will arrive this September, while ASOS is also looking to move into footwear. Overall ASOS sells 650 product lines and it is ambitiously hoping to expand this to 1500 in 18 months time.
Another key aspect of this business is keeping lead times as short as possible and the current period is an acceptable 3-6 weeks. Short lead times also help ASOS maximize its big winners by reordering quickly after it runs out of stock.
ASOS currently received 500,000 unique monthly users, up over 40% from the previous year, but the value of its burgeoning reputation is shown by the fact that 60% of new customers return at least once, while over 70% of sales are from repeat customers. However, the most important indicators are the conversion of website visits into sales and the average value of orders. Its latest results showed a sharp improvement in the conversion rate from 3.8% to 4.5% partly because ASOS can now afford to buy in a wider range of sizes. In the early days ASOS could only afford stock size 8 12s, only half the available market, but this range has been expanded to size 6 16, while the company is also bringing in a wider range of colours. This trend will be enhanced further as the new product categories, such as jewellery and health & beauty come on stream.
ASOS is also benefiting from customers making add-on purchases with its average basket size increasing from 26.50 to 31.50 since January. This is thanks both to dropping the spending threshold for free postal delivery from 50 to 40 but also adding cross-selling functionality to the website. After a customer clicks to purchase a product the website moves to an intermediate page before the checkout, which displays products of a similar type bought by other customers simple but surprisingly effective.
In spite of rapid growth, ASOS has stayed focused on quality control, with returns remaining fairly static at 19%, and other initiatives, such as providing more detailed product on the website should keep this figure stable.
Marketing efforts this year will cost 0.8m which will be immediately written off against profit. Half will go on advertising in glossy lifestyle magazines, such as Heat, Glamour and New Woman, adverts which have a rate card of 8,000 each and go to a well targeted audience of around 50,000 consumers. The remainder is spent on affiliate deals, linking itself to other complimentary brands which bring in 30% of the sales total.
One useful dividend from its marketing efforts is that a database of registered users has grown to almost 340,000 people, who are sent regular e-mails about latest offers at little extra cost.
Although ASOS is concentrating predominantly on the UK market is has recently soft launched in the US, Canada and parts of Europe. This involves no formal advertising, while the product is packed and shipped from the UK, and overseas sales currently chip in a useful 6% of the total.
With ASOS shares up over 400% since February and 142% since our May tip, investors are clearly factoring in an outlook with clear blue skies. Sceptics might argue that its larger rivals are likely to make life tougher by throwing more cash into their on-line presence but nevertheless, the overall size of the pie is increasing so rapidly that this shouldnt be a problem. VISA have calculated that UK card holders spent over 2.4bn online just in the first quarter of 2004, a year-on-year increase of 123%, showing that consumer fears about the integrity of internet security and reliability of parcel deliveries have well and truly subsided.
Seymour Pierce forecast pre-tax profit of 1.36m this financial year, rising to 2m in 2006, for earnings of 1.8p (no tax) and 2.5p (10% tax). The shares remain well worth watching.

I am delighted that my two notes (308 and 310) flushed out such positive responses. For me, it proves the value of contributing to this bb. In one sense you are giving away your own perspective but in fact receiving perspectives from those with advantageous starting points.
baheid (313). Your hands on input is particularly valuable and I hope you will continue to impart these nuggets. Your last paragraph puts well the advantages that ASOS hold over the High Street retailers. Own branding must have great potential.
willfagg (314). Hits the nail on the head. 1 is only 68m cap. Subject to continuation of good management, ASOS appear to have a far better scenario than lastminute.com for sailing to the mid-caps and staying there.
SALKELDJP (315). The copy of the Newsletter report is very helpful as again it gives good inside view resulting from interview with chief. exec. The conclusion "the shares remain well worth watching" needs the additional comment "from the inside", i.e with a significant stake.

Sticking my neck out, 58.5p will prove a good buying opportunity so suggest selling some of those dogs and building up the stake this week. With announcements due next week, there is bound to be weekend comment and a rising market. Look forward to chewing the results with the team!
Eric

So M&S are offloading their retail web site to Amazon! Must be good for ASOS whose only focus is the on-line business.

VERY VERY QUITE TODAY FOR ASOS TODAY,ANY COMMENTS.

ateeq180
Suspect it is just a pause for breath. Press comment and attention is elsewhere. Those buying ahead of the results have probably bought at the end of last week and yesterday. I believe it is a buying opportunity with good news anticipated on Friday; should be Wednesday (edit)
Eric

The AGM is tomorrow afternoon. There should be an update on current trading released on the RNS wire to coincide. I am going to the AGM so will post my thoughts in due course.

Cheers

BH

baheid
Awaiting the report from AGM with baited breath! AGM statement (see News) says that sales up 86% up in first five months, which is way ahead of forecasts. That doesn't include effect of new buyers and, with Xmas to come, we could see equivalent growth in full year. Any projections given at AGM. I remain as bullish as ever!
Eric

quite frankly given this report which underlines the amazing growth they are achieving i would expect them to reach a new high, but maybe it will happen soon

BEWARE, EVIL K as just announced he as gone short on this one.

cheers GF.

bet u they r a 1 by xmas and be sure its evil K as lost.

Hope your right Will, I have no position either way.

cheers GF.

Up this morning, burn evil burn like you did on Regus.

Sorry for the delay folks

AGM FEEDBACK

AGM was very positive and there was loads of useful stuff to come out of it.

- AMAZON.COM - the Amazon deal is a BIG positive. This relates to Amazon.com (not amazon.co.uk) and gives ASOS recommended retailer status. This basically means that when people in the USA click on the "apparel" category they will see between 8-10 merchants displayed prominantly on the page and classified as "recommended", this coincides very nicely with the lunch of the US affiliate marketing and the acceptance of dollar payments. Given how massive the userbase of Amazon is this has enormous potential
- USA/INTERNATIONAL margin story. NO VAT - a nice 17.5% uplift on margins to offset the $5 shipping cost per item.
- ATTENTION BEARS. The costs associated with the move to a new warehouse are likely to be MINIMAL. Nick Robertson says that there are loads of options but highlighted that the most likely is a move to a big warehouse but ASOS nly pay for what they need. He suggested possibly a lease for only 30k sq feet with options to scale up as and when required.
- BUYING DIRECT / OWN BRAND. Their buying scale has allowed them to strip out the middle man (wholesalers) this process has already begun but will continue and there should be a considerable margin uplift.
- MISS SIXTY EXCLUSIVE DEAL. Margins of 55%, perfect label for the demographic. Evidence that ASOS is getting the attention of the industry.
- MENSWEAR. Very happy with progress in menswear and the response to recent ads in the likes of FHM has been very positive. Suggests the buying and execution in what is a new segment for ASOS has been strong.
- INTERNATIONAL AFFILIATE PROGRAMS have literally just been running for about 10 days, so we should see the positive impact on the sales line as this gathers momentum. The ASOS affiliate program in the UK was recently voted No.1 by affiliates and given its low cost coupled with the brand awareness which should arise from the Amazon deal all indications are that we should see some decent growth from this market in the next year.
- REGISTERED USERS: CEO confirmed that trend since beginning 2003 was for average monthly registered user growth had moved from 10k to 15k broadly. There is a seasonal dip however between April and September. In 2003 the number dipped down to about 8000 before resuming its upward trend. CEO said that in this context the 15000 monthly additions between June and August is VERY POSITIVE.

BH

GOLDFINGER tells us that Evil has gone short on ASOS, and I began to consider why anyone would go short of this stock....always a useful exercise if you happen to be long! Clearly there are many issues to consider but they can probably be categorsied as follows: Firstly, falling sales are reported due to any number of reasons...(well after the AGM statement yesterday we can discount that happening in the short term), Secondly, competition is likely to cap ASOS's growth...well ASOS already operate in a fiercely competitive marketplace, with a number of high profile, on-line sites already established....and seem to handle the competition from well established brands rather well. Thirdly, barriers to entry...low, BUT it takes some time to establish a company, and put together a well oiled operation that can really compete on brand, margin and quality of product. Fourthly, loss of focus by the management team....again ASOS have demonstrated a driven sales approach and seem to have both expansion of product line and new growth opportunities underway. Finally, Balance Sheet or Cashflow problems...well again this does not seem to be the case, quite the opposite in fact. To conclude this short analysis, I may have missed something as I am not a great bear, but I think I will go out and buy some more stock in the market, because this is still a great price...with house broker SP increasing its profit and EPS forecast after yesterday's AGM. No if Evil really has gone short it must be a bluff!

John, hes not bluffing he is short and gives his reasons as competition, says theres no patent to stop this, says he feels the business idea will be copied.

Points out that there is a frenzy behind this one and that the company as negligible capital backing. Sees competition coming in. He was long of the stock by the way.

John I dont hold the stock so I have no real view either way, just know its dangerous taking EK and his FOLLOWERS on. Dont forget he is a long termer.

I have had a look on the other big site this morning and Evil as actually posted refering to the stock. Its not an imposter either as its the same handle as when he posted on 3DM.

cheers Gf.

Goldfinger - thanks, but if he is short and I believe you on this, he must be using the billboards and his other media outlets to attempt to garner support for his views, and thereby drive down the share price. Reviewing the excellent post from baheid on key points arising from the AGM, I suspect that Evil may change his mind on this one, after all he used to be Long, and probably sold out too soon! I have no reason to change my view on this stock it is a screaming BUY! What we probably now need to boost the share price is more Institutional involvement, either that or a bid.

seeing the recent postings and read the agm statement i have no reason to sell out of the stock at the moment.this is coming up to the best trading period of the year why would you want to short at this time? new products coming in time for xmas.if one of the reasons evil is short because of comption it will take a long time to put into place all that needs to be done,then will there be serious comption within a year i dont think so.asos is eating into all the online retails apart from next,should secure 2 place in the hitwise list in dec.dyor this is my own view as long term readers of this thread know i have held this stock since the start of the year.cheers woodie

I agree with you Woodie, and the case for shorting 3DM was an entirely different case. You have to question Evil's logic in shorting this stock because he thinks the low barrier to entry etc will produce competition on a scale that will dilute ASOS'e sales and earnings in the near term. There may be some short turbulence etc as a result of his published position, but as Xmas approaches, there is only one direction this share price will go...UP. After a really stunning AGM statement the market's reaction so far has been muted, but wait until the story unfolds and everyone catches up!