ASOS go from rags to riches

As ASOS announced pre-tax profits of £20.3 million, early morning trading saw the share price increase by 6.64% to 674.5p. Nick Raynor, investment advisor at The Share Centre, explains what this means for investors.

"We have seen an incredible rate of growth from ASOS due to the growing popularity of online shopping and the desire by the youth of today to look like their idols and heroes. ASOS began by copying celebrity styles at affordable prices and now offers a wide range of clothing and accessories at all price points.

"When ASOS's story began in 2003, the share price was just 3p and today it stands at 674.5p. That means £1,000 invested back in 2003 would now be worth over £213,000.

"In order to stay ahead of other online fashion retailers, further developments in 2010 will see fashion followers able to trade trousers, deal in dresses and barter on bags as the company launch an online marketplace platform providing customers with a channel to sell their own clothes.

"The AIM listed company also reported a 95% increase in international sales to £63m. Plans to continue the growth of its international presence continue in to 2010 with the launch of a stand alone American site.

"ASOS is in the almost unique position of having no debt and rising levels of cash in the bank. Investors may be disappointed to see there is still no dividend but we are happy to recommend the online retailer as a ‘buy' for investors willing to accept a higher level of risk. We feel there is more growth to come."