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Asos to Create New Supply Chain to Meet US Market Demand

Fashion e-tailer Asos said Tuesday that sales soared in all its markets last year, most notably in the United States.

The British company beat analyst predictions by posting a 26 percent increase in group revenues in its fiscal year ended Aug. 31 to reach 1.4 billion pounds, or $1.7 billion. Sales jumped 50 percent in the U.S. and increased 27 percent in the United Kingdom, while its European business registered a rise of 28 percent. The company also saw growth in Australia.

This helped Asos record a 37 percent increase in pre-tax profits before exceptional items. But after taking into account a one-off 20.9 million-pound settlement ($25.7 million) in a trademark infringement dispute and losses of 10.1 million pounds ($12.4 million) from the discontinuation of its in-country China operation, pre-tax profit plunged 31 percent to reach 32.7 million pounds ($40.2 million).

That being said, international retail sales accounted for 57 percent of the company’s revenue last year, meaning that less than half of its income was generated on its home turf. Asos attributed its U.S. sales growth, in particular, to reinvesting duty savings to improve its price proposition, offering more locally-relevant brands and cutting standard delivery time from six days to four. The company’s U.S. warehouse consistently fulfills more than a quarter of its U.S. orders.

In fact, after reviewing the American market during the year, Asos plans to design a supply chain that will underpin its growth plans stateside, though no further details were disclosed.

Asos said its active customer numbers increased 25 percent during the year to reach 12.4 million people worldwide, with site visits rising 22 percent and the average order value inching up 3 percent. Order frequency also increased by 4 percent.

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“I’m pleased with progress in the business. The strength of these results reflects our unwavering focus on delivering great customer experience, supported by rigorous execution of our investments,” chief executive Nick Beighton said. “We continue to target our growth opportunities, so we’re accelerating investment in both logistics and technology. The pace at Asos is continuing in the new financial year, which we are looking forward to with confidence.”

Looking ahead, the company projects sales growth in the range of 20 percent to 25 percent in the new fiscal year. Asos also plans to double its investment in mobile, noting that 66 percent of its traffic last year came from mobile devices and 51 percent of the orders it received were placed on mobile platforms.

Plus, after adding 233 new brands last year, Asos expects to launch “Big” and “Tall” menswear collections as well as a new private-label sportswear range this year. In addition, the online retailer will expand its gifting, beauty and grooming, lifestyle and loungewear ranges.

Given the growing momentum within the business, the company has decided to accelerate investment in both logistics and technology capabilities and said it expects to spend between 120 million pounds ($148 million) and 140 million pounds ($172 million) doing so.

Asos sells more than 85,000 branded and private-label lines through eight localized websites, launching about 4,000 new styles each week and shipping from fulfilment centers in the U.K., U.S. and Europe to almost every country in the world. The company came under fire recently over reports of exploitative working conditions at its global distribution center near Barnsley in north-central England, which Beighton described as “inaccurate and misleading.”