Asos chief executive Nick Robertson today set out how online fashion retailer will build the infrastructure it needs in order to reach its next turnover target of £2.5bn, after it reaches its £1bn target in the current financial year.
Robertson told journalists at a lunchtime press briefing today that after achieving the £1bn sales figure in the second half of this year, “we need to set our sights on what the next figure looks like and ramp up quickly.” That figure, he said, would be £2.5bn. Asked whether he was confident that Asos would achieve £1bn in sales this year, he said retailer would hit that target if it grew by 27% over the year, significantly lower than the 34% growth in sales that the fashion pureplay unveiled today in the first half of the year. But he declined to specify a date by which Asos expects to achieve that £2.5bn figure.
In the half-year to February 28, total revenues at the online fashion pureplay rose by 34% to £481.7m, while retail sales rose by the same percentage to £472.3m. In the UK, sales were up by 32% at £182.0m, while international segment of sales rose by 35% to £290.3m.
But £68m was invested in areas including IT and warehousing, denting pre-tax profits, which came in at £20.1m this year, down from £25.7m at the same time last year. Spending on warehousing, said chief executive Nick Robertson (pictured), would “more than double the sales capacity, with greatly enhanced efficiencies at our UK warehouse, a new Eurohub in Berlin, an expanded facility in Ohio in the US and a new warehouse in Shanghai.”
The company also expects its “start-up” China website will lose £9m in the current financial year, to August 31.
“This increased pace of investment has reduced our profitability in the period, but will deliver significantly increased capacity as well as efficiencies in the longer term,” said Robertson. “ASOS is not and has never been about the short-term; the scale of the global opportunity remains as exciting as ever and we are investing for the many opportunities ahead.”
The new warehousing positions Asos for its future expansion plans. With a warehouse in China, it will be able to serve the East, while from Berlin it will serve Europe. It has also extended its capabilities in the US and UK. That, said Robertson, positioned the company well for future global expansion. But he said the company would put a pause on global expansion of websites in the coming six months to a year while it established its existing position. Longer-term, Asos will then look at markets such as Japan, Korea, India and Brazil.
Robertson also set out technologies that will soon be introduced on Asos. Among them are local pricing, which will enable the retailer to offer different prices and discounts from one market to another. The new technology, he said, would be trialled first in Australia, where it would mean, among other issues, that the company would be able to sell some brands into the market that it previously could not.
A data warehouse that will give Asos a single view of inventory worldwide will go into operation in June.
Robertson also said the Asos trial selling Primark clothes was “probably not moving the needle” for either retailer. He also ruled out speculation that Asos shops would open.