Online retailer Asos beat expectations this morning, with a jump in profits - but the threat of competition still remains.
Revenues rose 33 per cent to £1.92bn in the year to the end of August, as retail sales rose 34 per cent to £1.88bn, and pre-tax profit jumped 145 per cent to £80m (although that rise was 26 per cent before exceptional items).
Sales in the UK rose 16 per cent to £698.2m, while international sales rose 36 per cent to £1.18bn.
Asos shipped 49.6m orders in the year, up 30 per cent on the year before, while the average basket value rose two year cent, and active customers rose 24 per cent.
All of that allowed it to raise its guidance for sales growth in 2018 to between 25 per cent and 30 per cent.
After a brief fall, shares were up 1.3 per cent at 5,770.8p in early trading.
Why it's interesting
While fast fashion continues to be en vogue among the the world's yoof, recent moves by Asos to ward off competition from the likes of Boohoo have kept investors interested: in the past few months, it has launched a new beauty shop, as well as offering same-day delivery in the capital.
Today chief executive Nick Beighton insisted the company has an "increasingly strong and differentiated proposition".
While analysts agreed, their only note of caution was the high costs involved.
"We maintain our view that Asos is an excellent business from a consumer facing perspective," said Sanjay Vidyarthi, an analyst at Canaccord Genuity.
"But the cost of delivering a pure-play online fashion proposition on a global basis is high and there is no hook here to suggest that this will change any time soon.
"Barriers to entry remain low and competition from multi-channel and other pure-plays continues to intensify."
What Asos said
It's been a great year for ASOS, with continued growth in sales and profits. Our international performance was excellent, as we reinvested FX tailwinds and benefitted from our continually improving customer proposition. In a competitive UK market, we achieved strong full price performance whilst further increasing market share.
At the same time, we ramped up our investment in building the increasingly strong and differentiated ASOS proposition. Our new agile technology platform is allowing us to accelerate our pace of innovation with great benefits for our customers, including new payment methods and additional language sites to come. The investments we are making will see us add 1,000 new heads and will lay the foundations for a 60 per cent increase in unit capacity and £4bn of net sales.