Asos revenue rises 18 percent, focus on bigger sales target

Tuesday, 20 October 2015

REPORTDuring the year to August 31, 2015 the Asos Group delivered total revenue growth of 18 percent, comprising retail sales, delivery receipts and third party revenue. The company said that retail sales grew to 1,119.9 million pounds (1,732.5 million dollars), driven by strong product, delivery

proposition enhancements, the successful launch of zonal pricing capability and implementation of planned price investments to increase price competitiveness outside the UK.

“I'm pleased with these results, which show encouraging progress. We have delivered profit before tax of 47.5 million pounds (73.4 million dollars), on track with our plans. Group revenue increased 18 percent, with UK retail sales performing well up 27 percent, and international retail sales improving as the year progressed. We currently anticipate sales growth for the new financial year of 20 percent, gross margin investment of up to 50bps and a similar EBIT margin to the financial year just ended. We remain focussed on achieving our next staging post of 2.5 billion pounds (3.8 billion dollars) sales," expressed Nick Beighton, CEO, Asos.

Financial highlights for FY15

While the retail gross profit margin only declined by 10bps driven by a much stronger full price sales mix reflecting improved customer confidence in product and prices, the group gross margin increased by 20bps following strong growth in delivery receipts of 61 percent and third party revenues of 23 percent.

Profit before tax of 47.5 million pounds (73.4 million dollars) remained in line with last year. The group generated retail sales growth of 17 percent during the year, driven by continued strong growth in the UK of 27 percent. International sales growth was 11 percent or 17 percent on constant currency. International retail sales accounted for 58 percent of total retail sales.

US retail sales have grown by 29 percent or 22 percent on a constant currency basis following further expansion of its range of locally relevant brands and continued strong full price sales mix. EU retail sales, despite being impacted by adverse currency movements and economic uncertainties during the year, increased 15 percent or 26 percent on constant currency basis.

Rest of World segment continued to be affected by adverse currency movements with reported retail sales down 1 percent compared to last year, but sales were up 6 percent on a constant currency basis.

Delivery receipts increased by 61percent driven by the introduction of global minimum free-delivery spend thresholds in late 2014 and a wider range of paid delivery options being made available to customers. Third party revenues, which mainly comprise advertising revenues from the website and the ASOS magazine, increased by 23 percent.

Increasing fashion portfolio for the young

Asos carries over 800 brands and during the year it added some important names like Abercrombie & Fitch, Hollister, Boohoo, Missguided, Adidas and Reebok to its portfolio. It also introduces lesser-known brands into the market, such as Rat & Boa, Jen's Pirate Booty and Hiptico. The company also continued to extend its offer of own-brand specialist ranges; Petite, Tall, Plus and Maternity.

The company also implemented zonal pricing capability on 113 brands across Australia, the US, France, Germany, Italy and Spain, and have seen an encouraging response from customers and volume uplifts as a result.

Mobile is now a huge part of the group’s business. It witnessed 5.4million downloads of the mobile apps in the last twelve months. In August 2015, nearly 60 percent of the traffic came from mobile devices and 44 percent of orders were placed on our mobile platforms.

Localised versions of Android and iOS apps were launched in France, Germany, Italy, Spain and Russia early in the year and in September 2015 launched a localised app in China to support the current website offer in this territory. The company also launched a 'New In' app in the UK and Denmark, an Apple Watch app and a new mobile news website, 'ASOS Likes', which provides customers with daily inspiration, pop culture and lifestyle news.

New additions to the board

During the year, group headcount increased by 12 percent following planned investments, predominantly within IT and retail teams. In addition, the board made a number of appointments, strengthening the senior management team of the group.

At the start of September the founder of the Company, Nick Robertson, stood down as Chief Executive Officer after 15 years in the role and Nick Beighton was appointed as successor. Nick Beighton joined Asos in April of 2009 as Chief Financial Officer and has since worked closely with Nick Robertson. In October last year, Nick Beighton was appointed Chief Operating Officer, widening his management responsibilities beyond finance. Nick Robertson will remain with Asos as a Non-Executive Director.

The company also welcomed Helen Ashton to the main Board of the Company as Chief Financial Officer in September. She has held a wide variety of senior management positions at Barclaycard, Lloyds Banking Group and most recently, debt management business Capquest. She has also held roles at ASDA Group and at GUS, amongst other companies.

To further strengthen the executive team, new People Director, Peter Collyer was appointed in March and new Chief Information Officer, Clifford Cohen, in May.

Given the positive start to the new year, Asos anticipates sales growth for the new financial year of 20 percent, gross margin investment of up to 50bps and a similar EBIT margin to the financial year just ended.

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