* Fashion e-commerce seen growing 14 pct in 2013
* ASOS to invest in warehouses and China launch
* ASOS shares down as investment to dent profit margins
By James Davey
LONDON, Oct 23 The British-based online fashion
retailer ASOS is stepping up investment in high-tech
warehouses to speed deliveries and cut costs as e-commerce
expands at a breakneck pace.
Online sales of clothes and shoes have exploded in recent
years to become the most popular e-commerce category in most of
Europe, with market research firm Mintel predicting the market
will grow 14 percent in 2013 to about 38 billion euros ($52
ASOS, the big success story in British retailing in recent
years with its fast-changing fashions snapped up by
Internet-savvy twenty-somethings, said it would increase
investment to about 110 million pounds ($90 million) over two
years as it reported a 23 percent rise in full-year profit.
It invested 33 million pounds in the 2012-13 year.
ASOS said it would expand its huge distribution centre in
northern England and build a new northern European hub to
service France, Germany and Scandinavia.
ASOS's sales to the European Union jumped 51 percent in the
year to Aug. 31, while worldwide sales, announced last month,
rose 40 percent to 754 million pounds. Its Berlin-based peer
Zalando on Wednesday reported sales growth of 72 percent in its
first six months, to 809 million euros ($1.11 billion).
The world's two biggest fashion retailers, Zara-owner
Inditex and Hennes & Mauritz, have been slow
to embrace e-commerce, but are now expanding fast, with Zara
recently launching in Russia and H&M in the United States.
Like Zalando, ASOS has grabbed market share by offering free
deliveries and returns, requiring maximum processing efficiency.
CUTTING COSTS, SPEEDING ORDERS
ASOS said its medium-term goal was to cut the labour cost
per unit handled in warehouses to 50 pence from 63 pence in 2013
and 71 pence in 2012, while speeding up delivery times.
"The ultimate goal is midnight cut-off for next-day delivery
to 98 percent of the UK," said ASOS founder and chief executive
Shares in ASOS, whose celebrity fans include U.S. First Lady
Michelle Obama and pop singer Rita Ora, have rocketed since
floating in 2001 and have more than doubled over the past year,
giving it a market capitalisation of about 4.5 billion pounds.
But its shares were down 2.3 percent at 5,289 pence at 1205
GMT after Robertson cautioned that the extra investment would
slightly dent profit margins.
ASOS is to spend 4-6 million pounds in each of the next two
years in China, where it will launch a local language website in
the next few weeks.
"Clearly we're excited about the potential - but that's a
10-, 20-year potential, not the next six months," the CEO said.
Last month, ASOS said it was on track to hit its 1 billion
pounds annual sales target a year ahead of schedule in the
2013-14 financial year. It said on Wednesday that this year had
started well and targets were likely to be reset early in 2014.
"This isn't about macroeconomics, this isn't about people
having more money in their pockets; it's about the fundamental
structural shift in the way that twentysomething-year-old
customers are now shopping," said Robertson.