Asos sales climb 12% in four months ending June 30

July 26, 2019 - United Kingdom

Total sales of Asos, an online fashion and cosmetic retailer, grew at 12 per cent for four months to June 30, 2019. Sales in UK and Rest of World (ROW) grew at 16 per cent and 14 per cent respectively. But in Europe and US sales were down at 5 per cent and 12 per cent respectively by operational issues associated with its transformational warehouse programmes.

Total orders placed by the company were 24.8 million depicting a rise of +14 per cent year-on-year, according to a press release by the company.

“Whilst we are making good progress in improving customer engagement, our recent performance in the EU and US was held back by operational issues associated with our transformational warehouse programmes. Embedding the change from the major overhaul of infrastructure and technology in our US and European warehouses has taken longer than we had anticipated, impacting our stock availability, sales and cost base in these regions. Where we have been unencumbered by these issues we have seen robust growth and overall our customer momentum is improving with the business hitting 20 million active customers globally for the first time, said Nick Beighton, CEO of Asos.

We are clear on the root causes of the operational challenges we have had, are making progress on resolving them, and now expect to complete these projects by the end of September. Despite these short-term challenges, the move to a multi-site logistics infrastructure will enable us to offer customers across the world our market leading proposition, facilitate our future growth, as well as leading to longer-term efficiency benefits.”

“Total group sales for the period were up 12 per cent on a reported basis and 11 per cent in constant currency. Our UK and ROW territories, which are serviced by our established automated distribution centre in Barnsley, continued to trade well. However, growth in the US and EU was lower than we anticipated, with sales impacted by operational challenges from our ongoing warehouse transformation programmes in Berlin and Atlanta. Execution of this programme is progressing, however the speed of ramp up in our Euro Hub automation and stock build within our US Hub has been behind our ambitious expectations. This has restricted product availability and range for our customers in these territories and we have seen a corresponding impact on sales as well as additional costs in support of transition. As a result, whilst visits growth across the group has shown positive momentum, sales have been held back by availability where we have seen operational challenges,” added Beighton.

“To the end of June, we have absorbed and offset the profit impact associated with the warehouse transformation issues encountered in both higher transition costs and lost sales. However, we now expect the temporary lack of stock availability in Europe and more limited width in US to continue to impact growth levels for the remainder of the financial year which when combined with extra costs to get our warehouses into a position to operate at the right capacity and efficiency has led to reduced expectations for this financial year. As a result, we now expect sales growth for this financial year to be broadly in line with year to date performance. The impact of the lower sales, higher warehouses transition costs and costs associated with organisational restructuring are set to impact our overall profit which is now anticipated to be in the range of £30-£35 million,” said Beighton. (PC)