British online fashion retailer Asos has reported a sharp slowdown in Australian sales that has put the brakes on its growth outside of the US and Europe.
Asos sales grew 47% globally in the 3 months to August, driven predominantly by sales in the UK, US and EU.
Its rest-of-world (ROW) sales grew only 26% in that quarter – down from 53% growth in the previous corresponding quarter and 113% in the second quarter of 2012.
Australia comprises 40% of Asos’ ROW division. According to Deutsche Bank’s Australian analysts Michael Simotas, Wassim Kisirwani and Michael O’Meara, last quarter was the first time Australian sales didn’t lead the ROW division.
- Consumer spending was down in the lead-up to the election. Australian retailers including Myer and David Jones also complained of low consumer demand earlier this year.
- Fewer Australians took up discounted products.
- The Australian dollar fell more than 10% against the GBP in the year to August 2013, making overseas purchases less attractive.
The analysts said the Asos result could point to improving conditions for Australian retailers.
“We continue to believe there is likely to be an improvement in sentiment in the lead-up to the key Christmas trading period, which would benefit discretionary retailers,” they wrote, highlighting Myer as the standout stock in the sector.
“It is too early to call a trend but this update suggests the weaker A$ may somewhat mitigate the challenges associated with leakage to offshore online retailers, as expected.”
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