ASOS goes for growth with £40m warehouse investment

ASOS, which targets internet-savvy 18-34 year-olds, has plans to transform itself into a 1bn business by 2015. Yesterday it announced sales of 223m in the year to March 31 while pre-tax profits rose 44 per cent to 20.3m.

The fast-growing firm has signed a lease on a 530,000 sq ft distribution centre in Barnsley, which will employ up to 1,000 workers including 360 permanent positions.

Andrew Wade, analyst at Numis Securities, said: "This warehouse marks a step-change in ASOS's development, being sufficient to take the business to its five-year target of 1bn of sales."

While many retailers have struggled ASOS has defied the recession, benefiting from a young core customer base and the migration of spending from the high street to the internet.

Its customers want to emulate the designer looks of high profile celebrities such as Kate Moss, actress Sienna Miller and TV presenter Alexa Chung, but ASOS clothes cost a fraction of the price.

Yesterday the group reported buoyant current trading and forecast another year of growth both in the UK and internationally.

Recent trading has been driven by strong demand for this summer's big trend, the maxi-dress, while skirts, shorts, Wellington boots, sunglasses and clogs have also proved popular ahead of the summer music festival season.

The new warehouse, which will replace an existing operation in Hemel Hempstead in Hertfordshire, will have initial capacity for 600m of annual sales following an investment of 20m this year.

Chief executive Nick Robertson said the capacity will increase to over 1bn of annual sales once the group pumps in a further 19m of investment over the next three years.

ASOS will fund the investment from operating cashflow and additional short-term facilities. In recent trading sales have risen 58 per cent in the nine weeks to June 6, with UK sales up 36 per cent and international sales soaring 118 per cent.

"It's hard to say whether this rate of growth is sustainable, but we are more confident this year than we were last year," said Mr Robertson.

The firm is stepping up its international expansion plans to tap into other markets as UK sales growth reaches its peak.

It plans to launch a US website in September and sites in France and Germany will follow later in the year.

The US is already its second biggest market for sales outside the UK and international revenues accounted for around 30 per cent of sales last year.

Mr Robertson said the global shift towards internet shopping among young fashion consumers has managed to counteract the slump in the economic cycle.

ASOS, which is celebrating its tenth anniversary this month, stands for As Seen On Screen.

The group is planning a range of new initiatives and is in talks with unnamed retailers over a potential service allowing customers to order online and pick up deliveries at other locations.

It is also hoping to launch ASOS Marketplace this year, which will allow customers to re-sell unwanted items.

Pre-vetted small boutiques and designers will likewise be able to sell via the forum, while ASOS has further plans to launch a 'fashion finder' that will include items not sold through ASOS.

"We want to be the resource for fashion," said Mr Robertson.

Last night ASOS shares closed up 15 per cent, a rise of 95.5p to 728p.

Company that's proved an internet sensation

Established in June 2000 and admitted to AIM in October 2001, ASOS.com is the UK's largest independent online fashion and beauty retailer.

It sells over 36,000 branded and own label product lines across womenswear, menswear, footwear, accessories, jewellery and beauty with approximately 1,300 new product lines being introduced each week.

Aimed primarily at fashion-conscious 16-34 year-olds, ASOS.com attracts over eight million unique visitors a month and has 3.7 million registered users and 1.6 million active customers.

Womenswear and accessories accounted for 72 per cent of last year's sales. Its premium range ASOS Black expanded from dresses to the full outfit including shoes and bags. Last year it launched the Green Room, an area dedicated to the sale of ethically sourced brands.

It also introduced ASOS Africa, a range sourced and manufactured in Africa, and a work wardrobe, as well as ranges inspired by vintage classics called ASOS Reclaimed.

Menswear accounted for 20 per cent of sales and attracted a number of big name brands including Paul Smith, Hugo Boss and the sports brands Nike and Adidas.