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Asos eyes £2.5bn sales via major growth from existing markets

Asos is almost certain to hit £1bn sales this financial year, but chief executive Nick Robertson has refused to be drawn about when the company will hit its next declared target of £2.5bn.

Recent investment in logistics and new technology has been made to prepare for this milestone for the 14-year-old company. This week he stressed that the major growth opportunities would come from the UK, US, France and Germany, while he played down the company’s recent initiative in China as “a start-up”.

He admitted that the company was looking at ways to enter Japan, Korea – which are both mature markets for mobile communications - Brazil, India and the Middle East, but stressed that nothing would happen ”anytime soon”.

Some 61% of the company’s sales are from outside UK, with France the largest foreign market, followed by Germany.

In four weeks Asos will begin trialling local or “zonal” pricing on its Australian site; currently all prices are a simple currency conversion of the UK site’s prices.

“The devaluation of the currency in Australia was effectively raised our prices by 15%,” said Robertson. “Now, if I choose, I could re-price some of our own- label products to take account of that. Also there are a few (third-party) labels that we sell on the main site that don’t want us to sell at present in Australia because they operate a different pricing structure. Now we can make the adjustments they want.”

For the six months to February 28, Asos revealed retail sales up 34% to £472.3m. UK sales rose 35% to £182m while international sales increased by 35%to £290.3m. Profit before tax fell 22% to £20.1m due to “accelerated investment” in its logistics, IT platform and Chinese launch. In the current year, the company will spend £68m will be invested to increase efficiency at its main warehouse in Barnsley, expand its facility in Ohio in the US, build a new “Eurohub” in Berlin and a warehouse in Shanghai.

Robertson explained: “This increased pace of investment has reduced our profitability in the period, but will deliver significantly increased capacity as well as efficiencies in the longer term. Asos is not and has never been about the short term; the scale of the global opportunity remains as exciting as ever and we are investing for the many opportunities ahead.”

Mobile and tablets now account for 42% of the traffic to Asos, with tablets producing the highest conversion rate to sales and mobiles being used more for browsing.  

The number of active customers at Asos increased 36% to 8.2 million shoppers during the six months. Robertson said that he expected UK sales to end up at about only 10% of the total by the time the £2.5bn mark was reached. “It’s like we are taking Oxford Street, putting a roof over it and taking it to the world,” he said.

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