Online fashion giant Asos today reports a rise in half-year revenues, although investments in its infrastructure and price-cuts hit net income as it posted a 10% decline in first-half profit to £18m
Trading for the six months ended 28 February 2015 included a “record” Christmas season, with total sales increasing by 14% to £536m (in 2014 it was £472.3m). UK growth remained strong with sales up 27% and International sales up 5%.
The retailer for 20 somethings saw encouraging momentum in international markets following planned price investments and the launch of a zonal pricing solution. The impact of this international price investment on gross margins, plus increased warehousing costs as Asos builds a global warehousing capability, resulted in a decline of 10% in profit before tax to £18.0m but the fashion destination remains optimistic in its outlook for the remainder of the year.
“With our continued investment in our international price competitiveness gaining traction, momentum in the business is building. This gives us confidence in the outlook for the second half and that full year profit and margin will be in line with expectations,” commented Nick Robertson, CEO.
After last year’s string of three profit warnings, a turnaround is well underway.
Asos pledged commitment to investing a total of £75m in its technology by the end of the next financial year, and it’s made significant progress during the last six months having rolled out zonal pricing functionality in Australia, France, Germany, Spain, Italy and the US during the period, enabling it to offer more competitive local pricing and to sell brands which were previously restricted in these territories.
It also launched localised versions of its Android and iOS apps in France, Germany and the US during the period, and in Italy, Spain and Russia during March 2015. Traffic from mobile devices now represents over 50% of all traffic and in response to this the e-tailer launched its first mobile-only promotions during the period. Asos will further expand its international mobile offering during the next six months with the launch of a localised app in China.
The principal international objective for Asos this period has been to restore price competitiveness, following a period of adverse exchange rate movements.
During the first six months of the year the pureplay reduced local currency prices for its Australian, New Zealand and Eurozone customers, and initial customer response is “encouraging”, with increased sales growth in these territories. It will continue to focus on its product and pricing offer in existing strategic markets before expanding into new markets, but expects to launch new European websites within the next year.
After investing £3.1m in China operations during the period, the Group is “pleased” with progress in this territory.
In a statement released this morning, the British online pureplay also welcomed its new People Director Peter Collyer, who joined in March and recently ran Global HR for Claire’s Stores, prior to that, he spent over ten years with The Walt Disney Company in a number of people roles and four four years with fashion retailer Oasis Stores.
Asos will soon be joined Clifford Cohen, who has been appointed as Group Chief Information Officer and will start in his role next month May. Cohen spent seven years with Marks and Spencer in a variety of IT related roles including retail, multi-channel and ultimately as Interim Group Chief Information Officer. Prior to Marks and Spencer, he spent eight years with Accenture where he led IT teams on supply chain for Dixons Stores, re-platforming for Sainsbury’s and Merchandising and Supply Chain for New Look.
The retailer’s search for a new Group Chief Financial Officer is now at an “advanced stage” and expects to update the market in due course.