ASOS posts surprise upturn in results
23 October 2014
Online retailer claims further gains are likely as the major automation projects rolled out by the company come on stream.
ASOS posted retail sales up 27% year-on-year, with UK retail sales up 35%, and international retail sales up 22%.
The company suffered from a number of setbacks and challenges this year including a difficult international trading climate, accelerated investment in warehouse infrastructure, as well as a serious fire at its Barnsley DC.
CEO Nick Robertson said: "Despite all that happened this year, we still delivered 27% growth in sales, with the UK a standout performance at 35% growth.
"We are in a period of major investment that comes at a short term cost, but the medium-term benefits will be significant. As a result, we've had to manage a number of factors including disruption from significant investment in our warehousing, the launch of our new business in China, the strengthening of the pound and the fire at our Barnsley warehouse in June, all of which combined to reduce profits by 14% to £46.9m.”
During the first half of the year ASOS decided to bring forward the expansion of its global logistics network. It invested £32.1m in warehousing infrastructure during the year, largely in the Barnsley warehouse where it built two extensions, added additional storage and developed a mechanised picking solution.
This involved short-term disruption to logistics activities, but ASOS says it will ultimately provide a global warehousing infrastructure with capacity for annual sales of £2.5bn across warehouses in the UK, China, the US and Europe. Revenues were close to £1bn for the year to August 31, 2014.
The mechanised picking solution launched during October 2014.
The company adds: "We expect that this solution will improve the per-person picking capability from approximately 65 units per hour to approximately 200 units per hour, delivering significant operational cost savings.
"Due to disruption during this period of infrastructural improvement, labour cost per unit in our Barnsley facility has increased by 19% to 75p (2013: 63p), which we expect to reduce during the new financial year as we begin to realise the benefits of our mechanised picking solution. We continue to target a medium-term labour cost per unit of 50p in this warehouse.”
Meanwhile, a 19-year-old man has been arrested on suspicion of arson at the Asos warehouse.
The blaze in June caused "substantial damage" and forced the company to stop taking orders for two days.