Interviews

British fashion sector struts its stuff as UK sales rise 27 per cent for ASOS

4 min read

08 July 2015

Former deputy editor

British online fashion store ASOS achieved a 27 per cent sales rise in the UK in the four months ended 30 June, outstripping the overall international sales growth of 16 per cent. By contrast, US firm American Apparel has embarked on a $30m cost-cutting programme.

ASOS is a global operation with offices in New York, Sydney, Berlin and Shanghai, but the British business is still true to its heritage.

Indeed, the Camden-headquartered company has a 24-hour Hemel Hempstead customer service station and a central distribution centre in Yorkshire, which will have all likely contributed to the its successful nationwide sales growth this year.

UK sales rose by 27 per cent to £158.4m in the period and outshone the 16 per cent increase internationally – though overseas sales proved to be more valuable at £227.6m.

However, a breakdown of the global results showed that the US sales grew by 43 per cent, Europe by 21 per cent and the Rest of the World by two per cent. Respectively the areas accounted for £44.5m, £87.4m and £78.6m to make the UK the overwhelming biggest seller.

Revenue has grown considerably for ASOS over the past three years, with figures rising from £552.9m, £769.4m and £975.5m in 2012, 2013 and 2014 respectively. And with promising figures already in 2015, the company expects the growth for the full year will be in the region of 20 per cent.

“Our continued international price investments underpinned our international sales growth of 16 per cent (+23 per cent on a constant currency basis), despite a number of currencies weakening against Sterling,” said Nick Robertson, CEO, ASOS.

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Roberston continued: “After accounting for our price investments during the period, the full year gross margin is nonetheless expected to remain in line with last year, assisted by tighter inventory control and strong full price sales.

“We anticipate that sales for the full year will be at the higher end of our guided 15-20 per cent growth range. We have increased investment in our people and our customer proposition, particularly in relation to free returns trials.”

The company’s full year – which ends on 31 August – results will be revealed on 20 October.

By stark contrast, struggling fashion retailer American Apparel – which fired CEO Dov Charney for sexual misconduct – has embarked on a $30m cost-cutting plan to turn the company around.

It will concentrate on pushing a new autumn line, a season that usually falls to the wayside for the business, while under performing stores will be closed to make way for faster-growing locations.

“Today’s announcements are necessary steps to help American Apparel adapt to headwinds in the retail industry, preserve jobs for the overwhelming majority of our 10,000 employees, and return the business to long-term profitability,” said Paula Schneider, American Apparel CEO.

“Our primary focus is on improving the processes and product mix that have led to steep losses over the past five years. Our customers, employees, and local communities around the world believe that American Apparel is an iconic brand that deserves to succeed. My job is to make that a reality.”

The firm noted that cutting costs and generating revenue will not necessarily result in immediate financial rewards and it may need additional funding.