Online fashion retailer ASOS maintained its rapid rate of growth today after revealing a 41% jump in annual profits to £28.6m (€32.4m).
The business, which was founded in 2000 and targets 16-34 year olds with clothes and accessories styled on those worn by celebrities, said overseas trade accounted for 43% of its £324m (€367m) in sales in the year to March 31.
It launched websites in the United States, Germany and France over the period and has plans for three more country specific sites this year as it targets £1bn (€1.1bn) of group sales by 2015.
In the UK, where the company faces intense competition, sales rose by 25% to £184m (€208.5m) but were outstripped by revenues generated overseas for the first time in the final quarter of the financial year.
The firm, which sells 50,000 product lines and attracts over 13 million website visitors a month, has been launching new initiatives to support UK sales, such as Fashion Finder – an internet shopping platform that allows consumers to purchase goods from a number of high street and internet-only clothing retailers. It offers online access to more than 50 other companies, such as Urban Outfitters, Reiss, Ted Baker and My-Wardrobe.com.
ASOS is also supporting growth through a new 530,000 sq ft warehouse in Barnsley, which is due to become fully operational later this month, while it has been offering free delivery and returns in certain areas.
The company added: “For the time being we will continue to use free delivery and returns in a planned and budgeted manner, but over time we aim to use it as part of the ongoing service proposition once the business’ scale can support it.”
The free shipping and returns reduced the company’s gross margin to 38.8% from 41.8%, while the one-off cost of switching to the new warehouse, from four sites in Hemel Hempstead, pushed bottom-line pre-tax profits down by 23% to £15.7m (€17.8m).
Chief executive Nick Robertson said: ``We remain positive in our outlook for 2012 and are excited by the opportunities for both our UK and international businesses.''
ASOS will launch new websites in Italy and Spain, as well as Australia where the company will be able to counter seasonal trends in Europe.
Analysts said the results were in line with expectations but shares still slumped 10% today amid investor caution over prospects going forward.
Investec analyst Katharine Wynne maintained a sell rating and said a recent hammering for shares in rival SuperGroup, after it failed to cash in on warm April weather, highlighted the “fragility of valuations in these markets”.
She upgraded her forecast for underlying profits in the current year to £40m (€45m), from £35m (€40m) previously.