Asos claws back profit

AsosPrice reductions and reduced delivery costs have brought Asos Australia back to profitability, while its international business experienced reduced first half profits.

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In the six months to February 28, global pre- tax profit fell to £18 million, from £20.1 million over the same period a year earlier. Revenue increased 14 per cent to around £550 million.

Shaun McCabe, director of Asos International, told Inside Retail PREMIUM that Australia has bounced back, but 2014 was a tough year.

Last year, Asos suffered a fire at its UK warehouse, causing the retailer to shut down its site for 48 hours and temporarily suspend orders. Around 70 per cent of Asos’ stock is held at the warehouse, and 20 per cent of it perished in the fire.

On top of this, a weak Australian dollar saw a decline in consumer confidence levels in 2014.

“Last year was tough for Asos Australia and I think that was mostly as a result of the currency situation. We were up against the strong pound and the weak Aussie dollar, but that’s settled down. We’ve had the benefit of that this year so our Australian business is back into growth and continues to be profitable,” said McCabe.

Earlier this year, Asos made two key appointments within its Australian team, reiterating Australia as one of its most strategically important international markets.

It appointed Jo Shapland, former Asos Australia senior marketing manager, as country manager, and Jerico Mandybur as a senior editor to the local editorial team.

Under Shapland’s leadership, Asos Australia has worked to invest in price reductions, reduce the cost of delivery, and launch free returns for its Premier customers.

“I think the team is as strong as it’s ever been and we’re in a good position to leverage the benefits for our Australian customers,” said McCabe.

“We’ve invested in price reductions for our customers. We’re always looking at ways to continue to drive demand to improve the customer experience, so that was one thing that helped stimulate some additional demand for us this year, and obviously had an impact on our margins.”

The UK-based pureplay aims to be the world’s number one fashion destination for 20 somethings.

It has 9.3 million active customers and sells 75,000 branded and own brand products in more than 240 markets around the world.

It has nine local language websites including the UK, US, France, Germany, Spain, Italy, Australia, Russia, and China.

A large focus is on mobile, with around 50 per cent of sales generated from mobile devices, and local language mobile apps launched in France, Germany, Italy, Spain, and Russia, with China next on the agenda.

“China is the one market where we still don’t have our mobile app and it’s probably the most important market to have a mobile app, so that will be launching there soon.

“We know the future for Asos is international, it’s 55 per cent of the business today and that share of the business will only continue to grow,” said McCabe.

This story first appeared in Inside Retail PREMIUM issue 2041. To subscribe, click here.

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