Online retailer ASOS has posted a 14% fall in profits after a torrid year in which it was hit by a major warehouse fire and tough overseas trading.
The fashion site, which sells over 75,000 branded and own-brand products to almost nine million customers, racked up sales of £975m in the year to August 31 and growth of 35% in revenues in its key UK market.
But pre-tax profits fell to £46.9m as ASOS counted the cost of investment in its warehouses around the world and the impact of difficult trading conditions in Australia, China and Russia.
Chief executive Nick Robertson said a period of major investment had come at a short term cost but that there would be “significant” medium-term benefits.
He added: “ASOS has always been about the longer journey to a very big prize: to be the world’s leading fashion destination for 20-somethings, and we are firmly focused on our next staging post of £2.5bn sales.”
ASOS shares were 9% higher today but have fallen more than 65% from their high in February as investors have shunned the group that was once regarded as a high-growth City favourite.
The business plans to invest £75 million over the next two years upgrading its IT and has warned that profits next year will be similar to this year as it modifies pricing on its local websites, where a strong pound has hit trading.
In June, a major fire at its Barnsley warehouse caused short-term disruption but the company was able to recommence trading within two days.
The warehouse is now functioning as before the fire and to date ASOS has received £11.5m in insurance receipts, with further business interruption reimbursements expected.
Over the year it boosted its number of active customers by a quarter to 8.8 million and the business now stocks over 800 brands including new additions such as Reiss, Agent Provocateur and Jack Wills.
Mr Robertson said: “Despite all that happened this year, we still delivered 27% growth in sales, with the UK a standout performance at 35% growth.”
“Our customer engagement was exceptionally strong, with highest ever average order frequency, conversion and average basket size, and we exited the year with 8.8 million active customers, an increase of 25% over last year.”