ASOS profits slump 68 per cent
Written by Hannah McGrath
ASOS profits have nosedived by 68 per cent to £33.1 million from £102 million a year before, driven by “disruptive” issues with its global warehousing network in Germany and the US.
The e-commerce giant’s annual report revealed that pre-tax profits had slipped, despite a 13 per cent increase in overall retail sales to £2.73 billion. The news comes after the company issued a series of surprise profit warnings, sending its value down by almost 60 per cent.
The full year results showed that international retail sales were up 11 per cent, with 60 per cent of total revenue now coming from international customers. UK sales recorded 15 per cent growth, followed by sales in the EU up 12 per cent and the US up nine per cent.
The fashion marketplace also saw a 14 per cent rise in the number of orders to 72.3 million, coming from 20.3 million active customers.
However, resolving a series of IT and logistical issues related to new warehousing capacity in Germany and the US have taken their toll on the bottomline. The statement said the issues surrounding “automation and mechanisation” of the Euro Hub facility had now been resolved.
Nick Beighton, ASOS chief executive, said: “This financial year was a pivotal period for ASOS, where we have invested significantly and enhanced our global platform capability to drive our future growth.
“Regrettably this was more disruptive than we originally anticipated, however, having identified the root causes of our operational issues, we have made substantial progress over the last few months in resolving them,” he continued, adding: “Whilst there remains lots of work to be done to get the business back on track, we are now in a more positive position to start the new financial year.”
ASOS recently announced that Luke Jensen, the chief of Ocado’s technology division, was joining the its board as a non-executive director.
This forms part of a wider reshaping of its executive team, with the addition of a chief growth officer, chief commercial officer, chief people officer and a chief strategy officer in the coming months.
The results explained that this “creates senior-level end-to-end ownership of our product and customer below the CEO for the first time” in order to prepare for the next phase of growth.
Earlier this month, ASOS also confirmed the appointment of ex-Sage Group chief people officer Karen Geary, former-Sky chief commercial and strategy officer Mai Fyfield, and Eugenia Ulasewicz, who previously led Burberry in the US.
Hugh Fletcher, global head of consultancy and innovation at Wunderman Thompson Commerce, commented: “ASOS’ dip in profit is somewhat surprising given the popularity of online fashion and the company’s ongoing international expansion.
"The challenge to deal with the increasing demand internationally, however, does signify how e-commerce continues to outperform the physical retail experience, and that retailers are now selling to a generation that has been conditioned by the speed and convenience of online shopping."