Global fashion online retailer Asos has seen profits tumble 68 per cent in the year to August, despite a 13-per-cent increase in sales.
In what Sofie Willmott, lead retail analyst at GlobalData, described as “a tumultuous” year, Asos reported sales of £2.73 billion and a profit of just £33.1 million. After two profit warnings during the year, investors were unsurprised by the numbers and its share price actually rose 16 per cent in post-announcement trading.
Asos says it received 72.3 million orders and its core UK market performed the best, where sales rose by 15 per cent.
“This financial year was a pivotal period for Asos, where we have invested significantly and enhanced our global platform capability to drive our future growth,” said CEO Nick Beighton.
“Regrettably this was more disruptive than we originally anticipated. However, having identified the root causes of our operational issues, we have made substantial progress over the last few months in resolving them.
“Whilst there remains lots of work to be done to get the business back on track, we are now in a more positive position to start the new financial year.”
Willmott said with overseas sales accounting for 62.6 per cent of group turnover, a modest 11.4-per-cent rise had a major impact on top-line growth.
“Although its reliance on territories outside of the UK has been an asset in the past, helping to drive total performance while its domestic market has been challenging, its troubles overseas remain a concern going forward as Asos attempts to improve its proposition and entice shoppers back. The retailer’s plans to bolster its management team with the addition of four new c-suite roles, alongside the four non-executive directors due to join imminently, is a wise one considering it has a number of key areas of focus in the year ahead.”
Willmott said it bodes well for Asos that it is clearly willing to adapt to survive – unlike some of its multichannel rivals that have been slow to respond to changing consumer needs and shopping habits.
“Although a quantifiable forecast for [the new financial year] was omitted from the results today, we expect the online pureplay to continue to outperform in the year ahead.”