Asos profits dive 68% on back of warehouse woes

Asos has seen annual pre-tax profits plunge 68 per cent in a year that included two earnings alerts for the online fashion giant.

Asos last year celebratedpre-tax profits growth of 28 per cent. Picture: Asos
Asos last year celebratedpre-tax profits growth of 28 per cent. Picture: Asos

The retailer, which issued its latest profit warning in July has reported earnings of £33.1 million in the year to 31 August.

Asos shares have almost halved over the last year, which has seen the group deal with problems ramping up its warehouses in the US and Germany.

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Chief executive Nick Beighton said the group is now in "a more positive position" as it posted a 13 per cent jump in sales to £2.7 billion.

The fashion retailer has reported issues upgrading warehouses in the US and Germany. Picture: PA Wire

In total, 72.3 million orders were placed, with sales in the UK growing 15 per cent, followed by a 12 per cent rise in the EU and 9 per cent in the US.

The rest of the world was up 12 per cent, the company said.

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Chief executive Nick Beighton said: "This financial year was a pivotal period for Asos, where we have invested significantly and enhanced our global platform capability to drive our future growth.

"Regrettably this was more disruptive than we originally anticipated. However, having identified the root causes of our operational issues, we have made substantial progress over the last few months in resolving them. Whilst there remains lots of work to be done to get the business back on track, we are now in a more positive position to start the new financial year."

The results contrast with figures released this time last year, when Asos celebrated pre-tax profits growth of 28 per cent.

Arlene Ewing, investment manager at Brewin Dolphin, said: “It’s been a challenging 12 months for Asos, with profits warnings and operational issues – garment placement and stock availability chief among them.

"This led the company to work hard on its customers experience and online offering through an elevated capex [capital expenditure] programme. While this has seen a rise in debt, revenues have increased more or less in line with expectations and the company remains profitable – albeit, profit before tax is significantly down on last year.

"It will take some time to judge whether Asos’ investments have paid off – investors will have a close eye on the next few sets of results.”