Asos, the online fashion retailer, said yesterday that it was only a matter of time before more high street chains followed Dolcis into administration as the internet trader emerged as a clear winner in the retail sector over Christmas.

Sales by Asos, which has made its name by selling clothing based on styles worn by celebrities, surged by 86 per cent over the seven weeks to January 20.

Pre-tax profits in the year to March are expected to reach nearly £7 million — 20 per cent above initial forecasts.

Asos's update came two days after administrators were forced to shed half the workforce at Dolcis — 600 jobs — after the shoe-store chain's heavy losses last year.

Nick Robertson, the Asos chief executive, said that Dolcis's failure was no surprise given that clothing was becoming increasingly an online purchase in the same way as DVDs and CDs.

Asos, unknown seven years ago, now has 1.7 million registered customers, up by 600,000 from last January.

Mr Robertson said: “I think what happened to DVDs and CDs is already happening to footwear — people simply buy it online. The high street is not a very positive place to be and it's going to be very tough for non-internet-only retailers.

“We expect to see the kind of growth we're experiencing for at least the next two years. Our numbers are getting bigger and bigger. We are not a small company any more.”

Asos will recruit more than 100 staff for its London head office this year, taking the total to 280. It has built a warehouse to cope with annual sales of £350million — more than four times the existing rate.

Shares in Asos, which have doubled in the past year, eased 1p to 225p yesterday.

However, Mark Photiades, an analyst for Landsbanki, said:

“The sales growth at Asos is a fantastic achievement, given the current consumer climate. In the light of the continued strong performance over the new year, we are placing our estimates under review and would expect to upgrade our numbers by around 22 per cent.”

Asos's trading update comes after three weeks of Christmas updates from retailers. WHSmith and Halfords are due to give quarterly updates in coming weeks.

European retailers such as Casino, of France, and Ahold, the Dutch supermarket chain, are to deliver trading statements today and tomorrow.

Industry experts said yesterday that they feared that the tough retail conditions endured over Christmas would intensify in February and March.

Both months were relatively strong for the high street last year, with good weather.

The Retail Think Tank (RTT), backed by KPMG and SPSL, the footfall specialist, gave warning that an interest-rate cut by the Bank of England next month would be too late to boost the high street this spring.

It added that the pound's recent weakness against the US dollar would hit margins of non-food retailers.

Helen Dickinson, UK head of retail for KPMG, said: “The tough year in 2007 looks set to become even harder in 2008.

"The RTT is predicting difficult conditions ahead, with a further weakening of demand growth, erosion in margins and cost inflation outstripping top-line growth. The first quarter of 2008 looks set to be challenging.”

Analysts said that the Christmas trading updates issued this year showed how specialists such as Asos, retailers with a strong home shopping arm and the supermarkets were best placed to cope with the slowdown.

One said: “The pain is being felt by mid-market general retailers, the department stores.”

Mr Robertson insisted that Asos was confident of being able to sustain its sales growth over the coming years.

Sales in the 42 weeks to January 20 were up 88 per cent on the previous year, with the bestsellers including a £35 satin-bow shift dress similar to one worn by Victoria Beckham.

Mr Robertson said that although Asos was considering options for overseas expansion, its sights were set on expanding in Britain.

It already sells brands such as Oasis and French Connection alongside its own.

A decision on a maiden dividend payout to shareholders will be taken before full-year results this spring.

Mr Robertson said: “We're an online department store and in a pretty unique place. If anyone wants to replicate us, they have a long way to go.”

Mike Ashley, the maverick entrepreneur behind Sports Direct, caught investors on the hop again yesterday by buying a fresh stake in Amer Sports Corporation, the Finnish sports equipment company that owns the Salomon ski brand.

Sports Direct said that it had bought 4.96 per cent of Amer for €48.2 million (£36 million), only two months after offloading a 12 per cent holding in the quoted Finnish group for €166.6 million.

Mr Ashley said in December that he thought that Amer was “undervalued” but hinted that it would still be some time before he invested in the group again. He said: “I can't keep all plates spinning all the time.”

Mixed fortunes

£46.6bn Online retail spend in 2007

86% Christmas sales growth at Asos

225.5p Asos share price yesterday. Asos floated at 20p in 2001

27% Fall in Marks & Spencer’s shares since December

600 Job cuts at Dolcis

0.3% Sales growth across the high street in December

Source: Times archives

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