Asos raises forecasts as profits soar

File photo of the ASOS distribution centre near Barnsley, South Yorkshire  Photo: Rui Vieira/PA Wire
File photo of the ASOS distribution centre near Barnsley, South Yorkshire Photo: Rui Vieira/PA Wire
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Online retailer Asos has reported a surge in full-year profits and upgraded its sales forecasts after it was boosted by a strong international performance.

The firm clocked a 33 per cent rise in revenues to £1.9 billion in the year to August 31, with pre-tax profits growing 145 per cent to £80 million.

On a constant currency basis, sales rose 27 per cent and, stripping out exceptional items, pre-tax profits rose 26 per cent.

Overseas revenue rose 36 per cent to £1.17 billion, while Asos described a 16 per cent rise in UK turnover to £698 million as “solid”.

Chief executive Nick Beighton said: “It’s been a great year for Asos, with continued growth in sales and profits.

“Our international performance was excellent as we reinvested foreign exchange tailwinds and benefited from our continually improving customer proposition.

“In a competitive UK market, we achieved strong full price performance whilst further increasing market share.”

As a net exporter, the collapse in the value of sterling since the Brexit vote has helped the group’s international sales rocket and allowed it to plough more into price cuts.

Asos added that the new financial period has started well and, as a result, it has increased its full-year sales guidance.

To cater for demand, the online company has been expanding its presence and capacity, for example by ramping up its US offering through a new factory in the country.

Mr Beighton added: “The investments we are making will see us add 1,000 new heads and will lay the foundations for a circa 60 per cent increase in unit capacity and circa £4 billion of net sales.”

Asos, whose high-profile fans include singer Rita Ora and ​former ​US First Lady Michelle Obama, has its main warehouse in Barnsley and is the town’s biggest employer.​ ​Asos is to invest a further £14.5m in its Barnsley warehouse over the next 12 months. The firm has invested £13m in the Barnsley site over the past 12 months to create a second dispatch sorter, additional in-bound conveyors and a fifth packing module.

The new investment in the Barnsley warehouse, which employs around 4,000 people​, will be spent on restaurant upgrades, locker rooms, relaxation spaces and the creation of a well-being centre. Asos will also spend money on onsite automation, increased office space and a new car park.

The warehouse has created an extra 300 jobs over the last 12 months and plans to create 500 fixed term contracts over the coming 12 months.

The ​site has increased the minimum wage to the UK Living Wage Foundation rate of £8.45 for all workers after three months​‘​​ ​service​, a 9​ per cent​increase over the past 12 months​.​ It has also taken on 60 warehousing apprentices ​through its relationship with Barnsley College​.​

Clipper Logistics, the firm that distributes goods for John Lewis, Marks & Spencer, Asda​ ​and Morrisons,​ ​​has won ​a​ new European returns contract from A​sos​. Leeds-based​ Clipper will handle European returns from ​its site in Poznan, Poland.

Ian Beaumont of KPMG

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