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Asos to Ramp Up Logistics Investment as Sales Jump 27 Percent

Looking to keep its online dominance going, Asos is designating funds to enhance its fulfillment network.

In a Nutshell: With site visits topping 1 billion for the first time over the first half of the year, e-commerce leader Asos said it’s accelerating some of its global capital investment projects–particularly in distribution and logistics. Total capital expenditures are set to increase to between 230 million pounds ($327.52 million) and 250 million pounds ($356 million) in the current fiscal year and the next, as the company builds toward 4 billion euros ($5.7 billion) in net sales capacity.

ASOS said it’s finalizing a 150 million pound ($213.5 million) revolving credit facility during the period of intense investment. During the half, the company said it also made significant working capital investment in inventory and trade payables, reflecting overall growth, improved product availability and inventory in multiple distribution centers to fulfill global customer service requirements.

Improvements to the customer proposition continued, with roughly 100 delivery solutions improvements and 1,200 tech releases made in the last six months. The company added close to 115 new brands to its site in the period.

ASOS said sustainability remains a key focus, and 70 percent of its cotton is now sustainably sourced, and expectation is to reach 100 percent before 2025. The online merchant has also successfully mapped its viscose supply chain to support the commitment to responsible sourcing of forestry products. In addition, the e-tailer published 2020 targets on circular fashion, including a commitment to take back used clothing from customers, training its design team on circular fashion design and increasing the use of post-consumer used textiles.

Sales: Retail sales, the primary aspect of the of ASOS business, improved 27 percent in the six months through Feb. 28 to 1.13 billion pounds ($1.61 billion) from 889.2 million pounds ($1.27 billion) in the year-ago period. Performance continued to be strong in the U.K., with 22 percent sales growth to 414.5 million pounds ($589.9 million). EU retail sales grew 32 percent and U.S. sales rose 27 percent.

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Earnings: Profit before tax in the period grew 10 percent to 29.9 million pounds ($42.58 million), as retail gross margin increased 100 basis points to 48 percent.

CEO’s Take: Nick Beighton, CEO, said: “These results show strong trading at the same time as we are making substantial investment in our future. Our customer engagement is going from strength to strength and we’ve achieved more than a billion site visits for the first time. Alongside our investment in our people and our technology, we are accelerating investment in our distribution and logistics, laying the foundation for 4 billion pounds [$5.7 billion] of net sales, a further step in building ASOS into the world’s number one destination for fashion loving 20-somethings.”