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Asos takes a hit to profits following warehouse investment

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Online fashion retailer Asos today revealed half-year profits down by more than a third as it invested in infrastructure designed to support the business towards its ambition of turning over £1bn a year by 2015.

Pre-tax profits fell to £4.48m in the first half of its financial year, from £7.00m at the same time last year as a result of £7.17m in exceptional costs incurred in moving its warehouse facilities to a single site in Barnsley. Turnover rose by 56% to £217.26m in the six months to September 30 and profits before tax and those exceptional costs rose by 66% to £11.65m.

Asos said the new warehouse had already started to deliver savings related to greater scale and productivity. It said: “We remain very excited about the continued prospects for Asos on the global stage and will continue to resource and invest in the business to exploit this unique opportunity. Despite the UK being more challenging, our profitable international expansion is more than compensating and we remain confident of achieving another year of significant progress and full year results in line with market expectations.”

The company also took on 200 new staff and increased its investment in technology and innovation during the period. Some 11% of its traffic is now via mobile phone, it said today, adding: “We see Asos as being much more than a shop; it is also fashion media and a technical enabler of fashion, competing for a percentage of our twenty-something customer’s time as well as an increasing percentage of their fashion purse. A number of initiatives are planned over the coming months to further enhance the customer experience.”

Retail sales were up by 60% in the period at £210.87m, with UK sales up 8% at £88.69m but international sales were up by 150% at £122.17m. Overseas sales now make up 58% of ASOS’ total sales.

Asos now has seven retail websites, following the launch of new sites in Australia, Spain and Italy during the half-year.

Nick Robertson, chief executive of Asos, said: “I am pleased to report a strong first half performance with retail sales up 60% to £210.9m, an acceleration from last year where we were ahead by 50% in the first half. This reflects the increasing contribution of our international business which grew by 150% in the period, representing 58% of our sales (37% last year).”

Asos, aimed at fashion-aware consumers aged between 16 and 34, has more than 13.7m unique visitors a month, and as of September 30 had 6.3m registered users and 3.7m active customers from 160 countries.

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