Expansion costs knock a fifth off profits at Asos
ASOS boss Nick Robertson admitted yesterday that launching in China had been tougher than anticipated after start-up losses in the country and investment in expanding warehouses elsewhere dragged first half profits down by 22 per cent.
The online fashion retailer made a pre-tax profit of £20.1m in the six months to 28 February compared with £25.7m in the same period last year, on sales up 34 per cent to £472.3m.
The outcome was in line with guidance issued last month, when Asos warned that accelerated investment in warehousing in the UK and Germany, as well as higher than expected start-up costs in China, would hit its full-year profit.
Robertson said Asos had struggled with trade restrictions in China, which in some cases made it easier for clothes made locally to be sent to the UK before being shipped to China again than transporting them directly within China.
“We have had to learn a lot,” he said, adding that the group will pause plans to launch new foreign language websites over the next six months.
Asos has earmarked £68m of capital expenditure this year, which will help speed up deliveries and allow the group to handle £2.5bn of sales annually compared with the £1.2bn of sales it can currently process.
“This increased pace of investment has reduced our profitability in the period, but will deliver significantly increased capacity as well as efficiencies in the longer term,” said Robertson. “Asos is not and has never been about the short term.”