Asos full-year profit down 14% despite sales rise
Online fashion retailer has reported a 14% fall in its full-year pre-tax profits after it experienced difficult trading conditions overseas and a fire at its main UK distribution facility.
In the year to 31 August, pre-tax profit fell to £46.9 million from £54.7 million in the previous year.
However, retail sales climbed by 27% to £955.3 million as UK sales rose by 35% and international sales increased by 22%.
During the year, the retailer grew its number of active customers to 8.8 million, which was a 25% increase on the prior year. In addition, it made improvements in its customer engagement metrics and accelerated investment in warehousing and technology to provide future capacity for annual sales of £2.5 billion.
Asos also improved it proposition in its key international territories of the US, Australia, France, Germany, Russia and China with changes to its delivery service and the introduction of new locally relevant payment methods. However, it said international trading conditions were difficult in the year, particularly as a result of adverse foreign exchange rate movements which impacted the local competitiveness of pricing.
In addition, the retailer incurred significant incremental costs related to investments in its infrastructure and its China operation, both of which impacted profits.
Nick Robertson, Asos chief executive, said: “Despite all that happened this year, we still delivered 27% growth in sales, with the UK a standout performance at 35% growth. Our customer engagement was exceptionally strong, with highest ever average order frequency, conversion and average basket size, and we exited the year with 8.8 million active customers, an increase of 25% over last year.
“We are in a period of major investment that comes at a short term cost, but the medium-term benefits will be significant. As a result, we’ve had to manage a number of factors including disruption from significant investment in our warehousing, the launch of our new business in China, the strengthening of the pound and the fire at our Barnsley warehouse in June, all of which combined to reduce profits by 14% to £46.9 million.
“Asos has always been about the longer journey to a very big prize: to be the world's leading fashion destination for 20-somethings, and we are firmly focused on our next staging post of £2.5 billion sales."
In a separate announcement, Asos said that chief financial officer Nick Beighton had been promoted to the position of chief operating officer.
In his new role, Beighton will add responsibility for retail and international to his existing responsibilities for finance, IT, supply chain and logistics to enable Robertson to focus on the company's growth strategy, customer experience and marketing.
The retailer has commenced a search for a new chief financial officer to strengthen the overall management team.
Robertson added: "Nick and I have worked together for five years during which time he has taken on a growing number of operational responsibilities. This appointment is a logical progression for Asos. Nick's broadened role will allow him to play to his operational strengths, at the same time further strengthening the management team.”
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