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Asos pre-tax profits leap up 18%

Asos’s pre-tax profit increased by 18% to £21.2m for the six months to February 29 compared to the same period last year, thanks to strong retail sales both in the UK and internationally.

Asos

Group revenues were up 21% to £667.3m. UK retail sales rose 25% to £289.5m and international retail sales were up 18% to £359.1m.

Mobile continued to dominate during the period, accounting for 60% of traffic. Nearly half of all orders were placed via mobile platforms in February 2016.

Asos’s gross margin increased by 50 basis points to 48.7% and retail gross margin by 40 basis points to 47.2%.

As previously reported, Asos has decided to discontinue its China operation over the coming months. This part of the business incurred a loss of £2.7m during the first six months of the financial year and Asos anticipates further losses of around £1m before trading ceases.

It will also incur one-off closure costs of around £10m, of which the majority will be non-cash.

The £2m of investments it had planned for China will be redeployed into other strategic markets.

Chief executive Nick Beighton said: “We’ve had a good start to the year and I’m pleased with progress on a number of fronts. These results demonstrate improving momentum in the business with group sales up 21% (25% in constant currency).

“Our UK sales remain strong, up 25%, and our international customers have responded well to our continuing price investments with sales up 18% (24% in constant currency).

“Particularly encouraging is the 17% growth in our active customers to 10.9m, with benefits from our investment in our technology and logistics delivering 21% growth in visits to our sites and growth in average order frequency, basket value and conversion.

“We delivered profit before tax of £21.2m, growth of 18%, in line with our expectations. I’m pleased to confirm that we are on track to achieve our previously stated sales and margin guidance for the full year.”

As of February 29 2016 Asos had 10.9 million active customers, up 17% year on year. Of those, 4.3 million were in the UK and 6.6 million internationally.

Its two-year investment in zonal pricing continued, with further investments in the EU and US.

Asos said it expects to deliver sales growth of around 20% for the full year.

Readers' comments (1)

  • Net profit (before tax) is only 3% of turnover.

    Fashion used to be a great margin business.

    Unsuitable or offensive? Report this comment

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