UK: Asos investment will place it in stronger position
- H1 pre-tax profit slides 22%
- Gross margin expands 60bps
- Sales climb 34%
Asos' investment is expected to more than double sales capacity
The investment strategy implemented by Asos should place it in a stronger position, analysts believe, after the online fashion retailer revealed declining first-half earnings but stronger sales growth.
Pre-tax profit slid 22% to GBP20.1m (US$33.5m) in the six months to the end of February, compared to GBP25.7m a year earlier. The decline was down to an acceleration in the group's investment in logistics, IT and its China start-up.
Nonetheless, earnings were 2% above Bernstein analyst consensus' expectation for GBP19.7m.
Gross margin expanded 60bps to 50.5%, also in line with expectations, while group sales were up 34% to GBP481.7m.
CEO Nick Robertson said the firm's GBP68m investment during the current year is expected to more than double sales capacity, with enhanced UK warehouse efficiencies, a new Eurohub in Berlin, an expanded facility in Ohio in the US, and a new warehouse in Shanghai.
Revenues were driven by 32% growth in the UK and 35% growth in international territories, the latter of which now accounts for 61% of total retail sales.
Asos' fastest growing segment was the EU, with sales up 65% on last year, including particularly strong growth in France and Germany. The company also grew market share in the US, with revenues up 31%.
Bernstein analyst Jamie Merriman believe Asos' investment strategy "makes sense" and will place the company in a stronger position, as the accelerated capex spend will provide greater capacity than previously expected.
"The key question for today's management meeting and in the months to come will be once ASOS has successfully increased capacity, how quickly can they achieve sales of GBP2.5bn, which management refer to in today's release as the 'next staging post'."
Asos is intent on ending the dominance of high street brands by attracting UK consumers to shop online. With the availability of established retail labels and previously unknown fashion brands on its ...
With the proliferation of mobile commerce in Singapore, Asos aims to extend its existing mobile shopping apps to Singapore over the forecast period, as Singapore is a country that has one of the highe...
This report provides an update of business news in the following categories: acquisitions, divestments and mergers; corporate social responsibility (CSR); financial results; international trade policy...
Consumers were spoilt for choice with the introduction of various international labels. COS, the more-expensive arm of H&M Hennes & Mauritz, opened its first store at ION Orchard in 2013. Kate Spade S...
- Low labour cost countries linked to highest risks
- Why should brands care about China cotton?
- China cotton: implications and opportunities
- COMMENT: Skills or new technology?
- UK reshoring hub hit by sweatshop claims
- South Africa to grow grass for recyclable textiles
- Activewear driving US apparel spend
- JC Penney share price falls on Q4 loss
- Sri Lanka and Bangladesh FTA talks underway
- Delta Galil open to M&A as profit grows
- Outdoor performance apparel: peaks, valleys, and green fields
- Myanmar's Garment Sector - Opportunities & Challenges in 2015
- Global market review of swimwear - forecasts to 2019
- Management briefing: Outlook 2015: Apparel industry issues in the year ahead
- Apparel Retail: Top 5 Emerging Markets Industry Guide