Investment in logistics, pricing and technology will propel Asos into a £4bn business, chief executive Nick Beighton has said.
“We think that £4bn, which is double where we are, is what is ahead of us,” said Beighton. “At the end of the next 12 months we will have laid the foundations for it.”
Asos revealed this morning that revenue for the 12 months to 31 August jumped 33% year on year to £1.9bn, fuelled by “solid” UK sales and an “excellent” international performance aided by the weakness of sterling.
UK sales increased 16% to £698m while international sales rocketed 47% year on year to £1.2bn.
Beighton said he was happy with the UK performance given the competitive market: “Our twentysomething customers are being challenged more economically. Everything else they buy with their disposable income is subject to inflation.
“That said, the first six weeks of this financial year have performed well and we’re not expecting UK sales growth to fall below 16%. We held all UK pricing despite sourcing pressures from the weak pound.”
As a result of the strong overall performance the etailer has increased its full-year sales growth guidance for the current financial year to 25%-30%, from 20%-25%.
Beighton said growth will come from an increase in market share in Europe and the US, while the UK market will remain stable.
“Markets like Russia and Australia are growing faster but over the next 12 months the momentum will come from core markets: Europe and the US.”
He added: “Price is a key driver for our shoppers but customer experience is also essential. We have 5,000 new styles every week, there is lots of newness and we have invested in the customer journey and delivery options.”
Gross profit for the year was up 33% on 2016 to £958.3m. The retail gross margin was up 10 basis points year on year, even though Asos did not increase retail prices to offset cost increases as a result of currency weakness.
Beighton said Asos had had the highest full-price sales mix this year in its history, adding: “I don’t know why others are on Sale but, in spite of a promotional environment, we haven’t taken part.”
On Brexit the chief executive said Asos continues to prepare through the development of its European distribution centre near Berlin in Germany, which may overtake Barnsley as its main warehouse: “We won’t know what the playing field will look like but we are continuing with our contingency plan. We have invested in our European distribution centre, which will be very beneficial to us.
“In future, rather than Barnsley being the main hub, the Eurohub could be and we’ll ship orders back to the UK from there. However, any backlog or interruption to the flow of goods won’t be good news.”