ASOS sales pass £1.8 billion as profit jumps 145%

ASOS

LONDON — Youth fashion retailer ASOS shrugged off mounting signs of a UK consumer slump on Tuesday as it announced a 27% jump in sales to £1.8 billion.

The online retailer's group revenue rose by 27% to £1.9 billion in the year to August 31, while UK sales in the period rose by 16% to £698.2 million.

Pre-tax profit leapt by 145% to £80 million as retail profit margins improved by 10 basis points to 48.6%.

ASOS' strong performance comes despite data from Visa earlier this year showing the worst slump in consumer spending in four years, with clothing particularly affected.

ASOS is known for its millennial-focused fast-fashion, selling own-brand products alongside brands like Adidas and Polo Ralph Lauren. Two-fifths of sales are own-brand and the company launches 5,000 new products on its site each week. At any one time the company has around 85,000 products in stock.

CEO Nick Beighton said in a statement: "It's been a great year for ASOS, with continued growth in sales and profits. Our international performance was excellent, as we reinvested FX tailwinds and benefitted from our continually improving customer proposition. In a competitive UK market, we achieved strong full price performance whilst further increasing market share."

ASOS said it expects sales to grow by 25-30% in 2018 and said it will accelerate investment in the business as a result of the strong performance. The company plans to spend £200-220 million on capital expenditure next year, with a major new US warehouse planned.

Beighton said: "The investments we are making will see us add 1,000 new heads and will lay the foundations for a c.60% increase in unit capacity and c.£4 billion of net sales."

ASOS had 135.7 million visits across mobile and desktop during August and has 15.4 million active customers globally.

Despite ASOS' strong performance — sales growth was in-line with City forecasts and profit was slightly ahead — shares have opened around 1% lower in London on Tuesday, with investors perhaps taking profit from the strong numbers.

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