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Asos reports double digit growth, despite losses in soon-to-close China operation

Asos to Ted Baker: latest trends in multichannel fashion retailing

Asos has reported double digit growth in sales and profits in the first half of its financial year, despite losses of £2.7m in its soon-to-close China operation.

The clothing retailer, which targets fashion-forward twenty-somethings, is a Leading company in the IRUK Top500 research. It announced last week that it would close its local China operation at a cost of up to £10m, and concentrate on selling to China through rather than a dedicated website. It said that operating losses to closure in the current financial year would come in at about £4m.

Nonetheless, Asos today reported revenues of £667.3m in the six months to February 29 2016, 21% ahead of the same time last year. Retail sales of £648.6m were 21% p on last time, with UK sales of £289.5m some 25% ahead. International sales, which now account for 55% of Asos’ sales, came in at £359.1m, 18% up on last time. Pre-tax profits of £21.2m were 18% up on the £18m reported at the same time last year. The figure included a £6.3m insurance payout following a fire in its Barnsley warehouse in June 2014. That money has been reinvested in international pricing, which chief executive Nick Beighton said had been attractive to overseas shoppers. The company’s zonal pricing which gives it the capacity to vary prices in local markets.

Beighton said the company had had a good start to the year. “These results demonstrate improving momentum in the business with group sales up 21% (25% in constant currency). Our UK sales remain strong, up 25% and our international customers have responded well to our continuing price investments with sales up 18%.”

He said he was particularly encouraged by a 17% rise in active customer numbers to 10.9m, with 4.3m in the UK and 6.6m overseas. Site visits were up by 21% thanks to investment in technology and logistics, and in February 2016, some 106m visits were paid to the website.

Mobile figures strongly in the results. More than 60% of traffic came from mobile devices in the first half, and nearly half of orders were placed via mobile platforms in February 2016. Mobile apps were downloaded 3.2m times in the first half.

Asos has focused on areas including customer engagement and on offering ‘best-in-class service’. In the UK it has worked with third party stores and now delivers a click and collect service through 61 branches of Boots, through 24 Doddle stores and also uses the Asda ToYou service for returns. Standard delivery and returns are now made through a four-hour estimated window with carrier Hermes, and Amazon’s Pass My Parcel service handles mobile label-less returns from 3,000 collection points. These services are set expand over the next six months, while click and collect cut offs will be extended to 7pm. More international customers can now enjoy next-day delivery, with French Premier customers seeing unlimited free next-day delivery to store.

It said that over the Black Friday weekend it despatched record numbers of parcels, while almost 3m were sent over the busiest seven days of the peak Christmas period.

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