Asos profits up 23% as it invests in supersized European distribution hub

In the year to August 31 Asos retail sales surged 40% to £753.8m. Of that, UK retail sales increased 34% to £276m and international retail sales soared 44% to £477.8m. International comprised 63% of total sales.

Asos retail gross margin grew by 100 basis points, as gross margin grew 60 basis points.

The etailer said it would “significantly increase” investment across its logistics and IT infrastructure, ploughing £55m into the business over the next two years. This includes expenditure of £25m to £30m on its huge Barnsley logistics hub and investment to replicate the Barnsley distribution centre in Northern Europe.

Asos chief executive Nick Robertson said: “During the year we continued to make progress towards our goal of being the world’s number one fashion destination for 20-somethings. We reached the milestone of 7 million active customers worldwide, following significant investment in our product offer, delivery options, customer experience and marketing. We also successfully launched our dedicated website in Russia during May 2013 and will soon launch our China operation.”

“Our £1bn sales target is now firmly in our sights and we have stepped up our investment in people, technology, logistics and marketing to support the significant global potential of the Asos business.”

Robertson said its focus is to grow China and its market share in the territories it already has localised websites. However, he said it would look to launch a site in another territory within the next four to five months.

Robertson said Asos had started its new financial year “positively” and that he was “very positive for peak”. He said: “It’s not about macro-economics, it’s about a fundamental structural shift how 20-somethings shop, and the vast majority is online.”

In the year Asos increased its mix of full-price sales and a lower level of discounting, particularly during Spring/Summer 2013. Asos’ new sourcing director Simon Platts will be charged with rationalising the supplier base to drive further retail gross margin efficiency and reduce lead times.