Goldman says Asos still set to grow despite falling margins

6th Jun 2014 10:51

Goldman Sachs is keeping faith with stock market darling Asos despite yesterday's news that the online fashion retailer cut its full-year margin guidance and blamed a strong pound for slower third quarter growth.Asos said its earnings before interest and tax (EBIT) margin for the current financial year would be 4.5%, down from its previous forecast of 6.5%.Goldman, which has a neutral view on the stock, said the EBIT miss was material but Asos was still experiencing good underlying growth.The company's UK growth of 43% was well above the broker's 21% forecast, but a 17% increase in international sales was below its 33% estimate. Overall group sales growth was 26% against Goldman's prediction of 29%.Goldman said sterling's strength at a time when the company had invested for growth but not yet initiated zonal pricing created "somewhat of a perfect storm" in the quarter."The company's growth in the UK is more encouraging and suggests it can still drive strong growth in markets where pricing policy is de-constrained," it said. Shares in Asos regained some of their poise on Friday, ticking up 205p or 6.6% to 3325p at 11:00 in London.PW