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Asos invests warehouse fire payout in international improvements

Asos.com has invested the £6.3m insurance payout from the fire at its central distribution warehouse in Barnsley this summer into its ongoing project to lower prices overseas, which it hopes will address the 2% dip in international sales reported earlier today.

The etailer reported a 8% rise in total sales to £252.2m in the three months to November 30, with UK growth the strongest, up 24% to £104.8m.

Weaker figures in September and October were put down to problems caused by efforts to automate the Barnsley warehouse – a programme of improvements unrelated to the fire – which were balanced out by record trading on Black Friday (November 28). Asos.com saw seven transactions per second on the increasingly popular discounting day.

“I’ve done this [job] for 14 years now and this is the first year Black Friday has been a significant part,” chief executive Nick Robertson told Drapers. “Normally it’s geared around Cyber Monday, but the whole media frenzy around Black Friday, I suspect, pulled that forward and kickstarted the online buying silly season.”

In contrast, international sales at Asos dipped 2% to £141.5m during the quarter. Robertson described the results as “disappointing”, but revealed the multi-million pound payout following an arson attack on the Barnsley warehouse in June has provided an opportunity to invest in rolling out zonal pricing, which he hopes will reverse the trend.

The etailer has now done this in the UK, France and Australia, allowing it to balance previously inconsistent costs on a territory-by-territory basis. Previously, Asos customers in Australia paid up to 25% more for products than those in the UK.

Robertson told Drapers he is aware of the challenges surrounding Asos’s international business: “If we don’t lower our prices, they will be out of kilter in our international markets.”

Nonetheless, Anusha Couttigane, senior fashion consultant at retail research agency Conlumino, believes domestic customers will come to subsidise international sales in the short-to-medium term.

She added: “Although this is a promising start [to the new financial year], sales growth for the period is noticeably much slower than recent years. Furthermore, retail gross margin is down by around 170 basis points on last year – an indication that Asos is not yet out of the woods following the full-year profit drop witnessed three months ago.”

As part of its growth strategy for the year, Asos is building warehouses in Germany and returns centres in Poland to support its European business. It will turn its attention to the US in the next 12 to 18 months.

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