Asos sales strong despite China woes
Online fashion retailer Asos has posted strong figures for its first half trading – UK retail sales are up by 25 per cent to £289.5 million, and pre-tax profit is up 18 per cent to £21.2 million.
Today’s Asos sales and profit results leave the retailer on track to achieve full-year expectations and are testament to a savvy understanding of both UK consumers and those across the rest of the world markets. For example Asos has been able to leverage its affordable fast fashion proposition to take advantage of the Black Friday period in the UK, whilst flexible zonal pricing structures has been integral to leverage the brand in disparate markets globally.
In spite of this worldwide success, China has proved too hard a nut to crack for yet another UK retailer. The closure of Asos’ Chinese language site (one of the retailer’s nine local language sites) represents a failure to fully understand both the Chinese consumer and the threat of home-grown competition. This undermined its investment in the market, meaning Asos incurred a loss of £2.7 million in the first half.
While China has proven a disappointment for Asos, numerous growth opportunities remain in other markets, with its wider EU, and US business in particular, seeing strong sales uplifts.
Growing brand engagement and an adept understanding of how to reach its young consumer base through social media and sharable content is providing a solid structure for growing sales of its fashionable yet affordable proposition. Fulfillment also remains a focus, and in the UK it has extended its click-and-collect facility with Boots and now also offers returns at Asda stores via its ‘ToYou’ service, while it has extended next-day delivery to more countries worldwide.
This investment has seen the number of visits to its websites increase to 106 million in February 2016 alone, and Asos must continue to capitalise on this popularity to make further progress in H2.
- Andrew Hall is an analyst with Verdict Retail.