ASOS presented its financial and operating results, which did not live up to expectations this year. The company undertook a huge investment in transitioning itself into a business with a scale and operational capability in both Europe and the United States. It turned out to be more challenging than ASOS foresaw.
In its press release, ASOS states that the transformation has been huge and the company underestimated the impacts of large scale operational change being executed on two continents simultaneously. With the benefit of hindsight, ASOS was not adequately prepared for the additional complexities of planning and trading across our expanded warehouse footprint. It became clear that the internal capabilities had not kept pace with this growth and change in complexity. Accordingly, the focus was lost on several of the companies' core competencies, notably product, presentation and customer engagement.
This was reflected in the financial performance. Total sales grew by 13% to £2,733.5m, supported by improving performance in P4. Retail gross margin reduced 250bps to 47.4%, reflecting the shift to a local platform in the US, expansion of the brand offering and adverse country mix as a result of the operational challenges experienced in the year. Profit before tax (PBT) of £33.1m further reflected a number of transitional impacts from the logistics transformation programme and warehouse implementations undertaken in the year.
ASOS is confident in having identified the root causes of the issues faced this year and continue to make good progress against the remedial plans set out earlier in the year. Embedding automation within its Euro Hub has progressed in line with the expectations and the company will continue to make good progress expanding its US stock pool in advance of peak trading. Whilst the company sees encouraging signs of recovery, both in its product performance and customer engagement, they are clear on what is still needed to further build momentum globally.
Nick Beighton, CEO, commented: "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. Our focus now shifts to ensuring that we enhance our capability to drive improved customer experience and leverage the benefits from the investments we have made. With over 60% of our revenue coming from international customers and a strong global logistics platform with the capacity to grow, we are well-positioned to take advantage of the global growth opportunity ahead of us."
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