Asos reports 18 per cent rise in sales
City Index October 20, 2015 4:36 PM
<p>A warehouse fire led to a drop in profits last year, but the company has reported a rise in profits for the year to August 31st.</p>
Following a string of profit warnings last year, online fashion retailer Asos has reported rising sales.
In 2014, the company's profits were hit following a fire at its main distribution warehouse in Barnsley. At the time, the company reported that the disaster cost it up to £30 million in lost sales. Around 20 per cent of stock was damaged inside the premises and ordering was put on hold for two days.
Other challenges for the firm have included infrastructure investment and adverse currency movements that made products more expensive for customers overseas. The retailer is also in the early stages of building its Chinese business.
However, rising sales are helping Asos move on from these difficulties, but the firm warns that margins remain under pressure.
Sales for the year to August 31st have gone up 18 per cent to £1.15 billion from £975.5 million. Pre-tax profits also rose one per cent from £46.9 million to £47.5 million. Net cash for the firm was also up from £74.3 million to £119.2 million.
A "winning strategy"
Commenting on the results, chief executive Nick Beighton said that the company would not alter its strategy, but it would put more emphasis on implementation.
"It's a winning strategy. It has always been a winning strategy at Asos," he said. "You should expect a greater focus on execution and a greater focus on our international strategy," he added.
In particular, Mr Beighton said the company would concentrate efforts on the US, France and Germany – in those locations, online growth has been forecast to outpace the UK.
Business in China would also be getting more attention. Mr Beighton says this is about "planting seeds for future growth [...] it’s still very early doors in terms of our China investment", he added.
Other plans include launching a loyalty card – this has already been trialled and will reward sales and customer engagement.
Mr Beighton also said that Asos expected sales growth for the new financial year of about 20 per cent.
On Tuesday morning (October 20th), shares in Asos rose 2.9 per cent to £30.12.
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