Asos profits down 87%
Online fashion retailer Asos has reported an 87% drop in its half year pre-tax profit after taking into account costs relating to its new warehouse capacity in the period.
In the six months to 28 February, total sales climbed by 14% to £1.31 billion.
Despite the uplift, Asos described its perfomance as disappointing and that trading had been impacted by a challenging market, its large scale transformational projects and some of the decisions it had made on short term pricing.
In a statement, the company said: “These decisions, combined with disruption from the scale and pace of change, temporarily compromised our customer proposition, notably “newness”, the competitiveness of our product and our engagement with our customers. We have already taken corrective action to address these issues and are also taking a broader look at how to better serve our customers and strengthen the Asos proposition. We are confident of delivering a stronger performance in the second half.”
UK sales rose by 16% in the period while international sales increased by 12%. Asos said active customer growth in the UK was strong at 13% year-on-year, although the rate of acquisition was behind expectations, particularly for younger customers. In addition, EU sales growth was slower than planned due to a weakness in the retailer’s French and German markets.
Commenting on the results, Nick Beighton, Asos chief executive, said: “We have identified a number of things we can do better and are taking action accordingly. We are confident of an improved performance in the second half and are not changing our guidance for the year.
“We are nearing the end of a major capex programme. Whilst this has inevitably involved significant disruption and transition costs, the global capability it now provides us gives us increased confidence in our ability to continue to capture market share whilst restoring profitability and accelerating free cash flow generation.”
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