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Is the Australian fashion retail industry dead?

Online fashion retail giant Asos (LSE: ASC) has continued its massive push for international domination. The company’s latest trading statement released last week revealed enormous growth which would have traditional fashion retailers choking on their morning coffee.

For the three months to 31 August total retail sales were up 47% to $354 million (£204 million), giving rise to a 46% increase in total group revenue. For the year Asos says retail sales are up 40% to $1.284 billion (£754 million), with international sales outside of the UK up 44%.

A large part of the international growth, which makes up 64% of total sales, came from establishing dedicated local websites for countries including Russia, France and Spain.

There was only slight upside for Australian fashion retailers like Myer (ASX: MYR) and David Jones (ASX: DJS). Bloomberg reported that Asos has seen a slowdown in sales in Australia in response to the decrease in the Aussie dollar, which Asos co-founder and Chief Executive Officer Nick Robertson said made products about 20% more expensive. The relief may be short lived. The Aussie dollar has jumped back up over September from US$0.89 to US$0.94.

The growth in Asos sales is in stark comparison to the sales growth reported by Australian fashion retailers this earnings season. David Jones announced total FY13 sales down 1.2%, while this month Myer announced full year total sales up a measly 0.8%. Specialty Fashion Group (ASX: SFH) announced sales growth of just 0.4%.

And things could be about to get a lot harder with the introduction of a giant new competitor into the fashion scene, Swedish retailer H&M. The company is set to open a flagship Melbourne store in March 2014 according to The Sun. It is reported the store will spread over three floors and will be one of the largest H&M stores in the world.

Foolish takeaway

Shares in all three Australian retailers have performed surprisingly well over the year to date , with David Jones up 22%, Myer up 28% and Specialty Fashion Group up 42%. However with added competition and stagnant growth they have limited long-term appeal.

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Motley Fool contributor Regan Pearson does not own shares in any company mentioned.

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