Tuesday 20 October 2015 7:34 am

Asos share price rises as sales smash through £1bn barrier

The figures

Group revenue rose 18 per cent to £1.15bn in the year to 31 August 2015, from £975.5m in 2014.

This was helped by retail sales, which increased 17 per cent, from £955.3m to £1.12bn during this period.

Pre-tax profit rose one per cent to £47.5m despite Asos investing in proposition, warehousing and people capabilities. These costs were partially offset by insurance proceeds of £6.3m from the fire at the Barnsley warehouse, and a reduced loss at its China operation.

But retail gross margins fell one percentage point to 48.6 per cent, showing the etailer is still struggling to add value here. However, it did enjoy a stronger full price sales mix, as customer confidence improved, reducing its reliance on promotional activity.

Shares in Asos rose 6.9 per cent to 3,130p per share in late afternoon trade.

Why it's interesting

Asos suffered an awful 2014, issuing a string of profit warnings and suffered a fire at its distribution warehouse in Barnsley.

Former chief financial officer Nick Beighton took over from chief executive Nick Robertson in September, and investors were eager to hear about his plans for the etailer.

"We are attracting more customers with a continued expansion of our delivery proposition and mobile offerings. Customer engagement has been exceptionally strong, with increases in average order frequency, basket size and value. We now have 9.9m active customers, up 13 per cent," he said.

"During the year we invested £50m in our warehouse capability and our technology, and we are investing a further £80m in the new financial year."

"Trading year to date has started well and preparations are at an advanced stage for peak season. We currently anticipate sales growth for the new financial year of c.20 per cent, 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 £2.5bn sales."

What Asos said

"We have started the new financial year well and preparations are at an advanced stage for peak season. We intend to make further investments in our prices where required during the year, as well as continuing to invest in our global logistics infrastructure and technology," it said.