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Asos pre-tax profit jumps 19% in H1

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Fashion e-tailer Asos has today reported a 19 per cent surge in profit before tax to £25.7 million in its first half as investment in its customer offer drove growth.

In the six months ended February 28th 2013, retail sales jumped 34 per cent to £352.3 million thanks to a strong performance internationally as the e-commerce giant continued to focus on expansion.

International retail sales leapt to £214.7 million, up 39 per cent on the same period last year and the group announced that it “remains on track” in launching websites in Russia and China in the months ahead.

Commenting on its upcoming Chinese operations, a statement from the e-tailer said: “Expansion into the Chinese market is an integral part of our strategy to be a truly global retailer.

“We have completed an in-depth review of the Chinese market, including the customer base, use of internet and social media, logistics and delivery options as well as product sourcing and storage.

“As a result, the operating model for Asos China will differ from our other international activities and will include a standalone technology platform, local third-party distribution centre, local delivery solutions and payment methods, and a larger multi-disciplinary in-country team.

“This will give us the right platform to provide a proposition tailored to our Chinese customers and to maximise the long-term potential from this exciting market.”

News of Asos’ move into the flourishing Chinese market came as OC&C Strategy Consultants in collaboration with Google revealed that international online sales outside the UK will rise sevenfold to £28 billion by 2020.

UK retail sales at Asos climbed 26 per cent to £137.6 million thanks to further improvements to its domestic proposition, including extending the next-day delivery cut-off to 8pm while the December trading period saw “a particularly strong performance”.

Asos continues to lead other UK retailers for unique visitors in the 15-34 age range while it has reached a total of six million active customers as of February 28th 2013.

Focusing on the “global twenty-something customer”, Asos has invested heavily in its own-brand offer as it reduced markdown spend through its ‘first price right price” approach.

Anusha Couttigane, Consultant at analyst firm Conlumino, said of the strategy: “Whilst Asos clearly understands the importance of diversification, its own brand offer remains a priority and still accounts for over 50 per cent of sales.

“This is key to achieving its ‘first price right price’ strategy and means that, despite a reduction in mark downs over the first half, the website continues to drive traffic.

“Asos now caters for all fashion possibilities – designer, high street, own brand and independent labels.

“By combining this with exciting emergent technologies, a fast-reacting, fashion led proposition and lucid international goals, Asos has put itself in a strong position to achieve long term sustainable growth.”

M-commerce remains an area of growth for Asos as mobile and tablet searches now account for 30 per cent of its traffic and it is due to begin refreshing its iPad and iPhone apps in the months ahead.

Further expanding its multichannel offering, Asos has today appointed delivery service provider ByBox to offer a return service , allowing customers to use its lockers to receive and return parcels as an alternative to home delivery as the group noted that offering a wide range of returns options is “crucial to its success as an online retailer.”

Also today, the e-tailer announced that it is to implement a long-term incentive plan for senior management aimed at retaining the wider team while building growth.

Commenting on the strong results, Asos CEO Nick Robertson said: “Momentum is strong, and we remain positive in our outlook for 2012/13 as we continue our journey to becoming the number one online fashion destination for twenty-somethings, globally.

“Our international roll-out continues and our £1 billion sales ambition for the Group is firmly in our sights.”

Published on Tuesday 30 April by Editorial Assistant

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