ASOS half year profits drop 87%
Written by Hannah McGrath
Half year profits at ASOS have slumped by 87 per cent due to expenses linked to US expansion costs, discounting and poor trading leading up to Christmas.
Pre-tax profit at the e-commerce fashion site for the six months to 28 February came in at £4 million, down from £29.9 million for the previous year.
Despite the pre-tax profit slump, ASOS chief executive Nick Beighton said the company would not change its guidance for the coming year and pointed to a 14 per cent growth in retail sales over the period to £1.3 billion as a sign of continued growth despite a “competitive market”.
UK sales were up 16 per cent to £481 million, along with a 12 per cent rise in international sales to £800 million. Total orders were up 15 per cent on a year-on-year basis.
The company issued an unexpected profit warning before Christmas, sending shockwaves through the industry, which had assumed online retailers were immune from the pressures of low consumer confidence and heavy discounting plaguing the High Street.
Announcing the results, Beighton said: “We have identified a number of things we can do better and are taking action accordingly, we are confident of an improved performance in the second half.”
He added that the company was coming to the end of a major expansion programme which involved “significant disruption and transition costs”, adding that global online fashion is a growing, £220 billion market.
“We now have the tech platform, the infrastructure, a constant conversation with our growing customer base,” concluded Beighton. “We believe that ultimately there will only be a handful of companies with truly global scale in this market. We are determined that ASOS will be one of them.”