Asos posts half year profit increase

Online fashion retailer, Asos, has posted a 14 per cent increase in profits for the six months to the end of February to £27.3 million.

The company saw a 31 per cent increase in sales to £889.2 million. UK retail sales rose by 18 per cent and international sales went up by 42 per cent.

Sofie Willmott, senior retail analyst at GlobalData, said Asos’ broad product range sold on local language and currency platforms, along with its aggressive delivery proposition and responsive pricing, allows it to steal market share from well-established international and local players.

“Asos’ mobile-first approach has paid off with mobile devices now accounting for 58 per cent of orders and 70 per cent of traffic,” she said.

Willmott said competitors targeting the 16-34 age group should take note that a spotlight on mobile functionality to create a smooth, and enjoyable, shopping journey will drive visitor-purchaser conversion.

“In a period of weak volume growth, retailers must use mobile channels to capitalise on frequent engagement and implement fast and simple checkouts to capture impulse spend.”

According to Willmott, Asos has continued to strengthen its product offer by introducing new brands, including competitors Miss Selfridge and Burton, while also broadening its own label offer into niche product areas such as plus size for men which was recently introduced and activewear due to launch in 2017 – allowing Asos to target a larger customer base.

“Meanwhile, the number of UK Asos premier customers lifted 41 per cent on last year, leading to an eight per cent rise in order frequency in the UK.”

GlobalData research shows Asos is market leading in driving spend through its delivery subscription scheme, with 60 per cent of consumers shopping at Asos more often since signing up.

Despite a 14.3 per cent rise in operating profit to £27.1 million, operating margins fell to 2.9 per cent from 3.6 per cent last year, signalling the impact of the highly promotional sector.

“Since Asos is committed to keeping prices stable despite higher inflation in 2017, we forecast margins to weaken further in H2.”


Comment Manually