Why Asos is selling more - but making less

The online retailer is feeling the pressure as competition heats up online

asos, fashion, business

ASOS / Facebook

Online fashion retailer Asos enjoyed a Christmas sales boost as international trade was particularly strong - however this translated into lower profits as prices on the site fell.

The website reported that sales in the final four months of 2015 rose by 22%, with a value of £206.2m.

Sale growth was fueled by a 20% increase in international orders - the corresponding figure in 2014 was 5% over the Christmas shopping season.

"This year has probably been one of the most difficult for fashion retailers," said Nick Beighton who took over from the company's founder last year after Asos was forced to issue a series of profit warnings.

“Autumn and winter in fashion is always tricky to predict and tricky to plan,” he added. A number of UK fashion retailers have reported disappointing profits in recent weeks, citing unseasonable weather during Autumn and the early winter months.

The statement reports that falls in prices meant that its "margin declined by a net 40bps."

Growth in international sales have been driven by orders from the US and the rest of the EU - they increased by 42% and 29% respectively.

Staying relevant

Asos's comparative advantage has been offering a smooth online shopping experience selling its own lines, alongside the goods of high street retailers.

As competitors such as Topshop / Topman, Zara and H&M improve their own apps and websites, Asos faces a challenge to stay ahead of the field in online fashion retail. 

It plans to invest £80m in new technology and distribution before the end of this financial year.

Asos reported that traffic on its mobile site increased by 85% over the 'Black Friday' weekend - while usage of its app was up by 120%.