Asos first-half profit falls on expansion costs

Asos saw first half profit drop as it invested in logistics, its IT platform and overall customer offering.

Profit before tax fell 22% to £20.1 million over the half ended 28 February, which it attributed to accelerated infrastructure investment in “warehousing and technology to create capacity for sales of up to £2.5 billion per annum, with some associated short-term incremental costs, as well as continuing to invest in our China start-up operation and in our overall customer proposition”.

The outcome was in line with guidance issued on March 18 when Asos warned that accelerated investment in warehousing in the UK and Germany to give the firm a sales capacity of £2.5 billion, as well as start-up costs in China, would hit annual profit.

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Sales grew 34% to £481.7 million, with UK retail sales rising 32% and international sales growing 35%.

“This increased pace of investment has reduced our profitability in the period, but will deliver significantly increased capacity as well as efficiencies in the longer term. ASOS is not and has never been about the short-term; the scale of the global opportunity remains as exciting as ever and we are investing for the many opportunities ahead,” said CEO Nick Robertson.

During AW13, the company said it increased customer choice by adding new third-party brands, introducing new categories, expanding existing categories and extending its size ranges to ensure it caters for all of its customers, whatever their size or shape.

“We now stock over 75,000 lines, an increase of 25% over last year. We have seen significant growth within our own-label underwear and lingerie categories, and within menswear we have added to our smart and work wear offer through more extensive choice across tailoring, shirts and ties within both own-label and third-party brands,” the company said today.

 

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