Asos China braces for losses

Online fashion retailer Asos is budgeting for losses as it breaks into the China market.

Announcing a pretax profit of £47.5 million for the year to August 31, the company offered an overview of its future plans geographically, including a lessened focus on the Australian market.

New CEO Nick Beighton said China was a “key market” for Asos moving forward but the company was still in startup mode there.

“It’s all about planting the seeds for future growth.”

He said Asos expects losses of £5 to £7 million over the next 12 months in China as it builds its offer.

In the year ahead, Asos will be focusing more on the UK – which remains its biggest market, Europe, the US and China.

Last year, global sales rose 17 per cent to £1.12 billion. UK sales rose 27 per cent while international sales were up 11 per cent.

Beighton said the online retailer’s mission to be the number one fashion destination for twenty-somethings, remains the same. The new CEO won’t be changing the Asos culture or the way the business does things, but he acknowledged the world Asos plays in is changing fast.

“It’s more about mobile, it’s more about social, it’s more about content,” he said.

The online retailer’s strategy is made up of four key pillars: great fashion at a great price, be awesome on mobile and, deliver engaging content and experience, supported by best in class service (ie. a friction-free experience from logistics through to customer care).

“This really has been another year of mobile,” Beighton said.

“In the last 12 months mobile penetration has increased throughout our business. In August 60 per cent of our global traffic came from mobile devices alone.” He added, just in the UK in August, 50 per cent of orders – not traffic – came from mobile devices.