Asos reports 22% fall in profits
It might be the fun go-to place for T-shirts with burgers on them, corsets, pleather playsuits and all manner of frivolous ‘youth’ clothing, but online giant Asos has reported a 22% slide in profits in the first half of the financial year, after it invested more in logistics and technology.
The group profit fell by £5 million to £20.1m in the six months to February 2014. This was despite retail sales climbing by 34% overall. In the same period they also managed to gain a 36% rise in new customers.
So people still love the cheap thrill of cheap, ever changing, fun, fashionable, made in China Asos. But is all this new investment – which includes a new warehouse in Shanghai, a new IT platform, a start up in China and something called a Eurohub in Berlin – going to derail its success?
Asos’ CEO, Nick Roberts, said it was all part of the ‘journey’, and added: ‘This increased pace of investment has reduced our profitability in the period, but will deliver significantly increased capacity as well as efficiencies in the longer term. ASOS is not and has never been about the short-term; the scale of the global opportunity remains as exciting as ever and we are investing for the many opportunities ahead.’
So it’s OK. We're not going to see a collapse in online fashion retail, because Asos isn’t about the short term. Apart from their clothes, which last about twenty minutes until they either fall apart or become laughably uncool.