Following the announcement of a hike in overseas sales, As Seen On Screen (ASOS) announced on June 2 its intention to foray into the Chinese market. UK fashion retailers have seen a contradictory surge and fall in sales over the last couple of years. Online retailer ASOS has seen a profit hike of 41% with international expansion. The company is benefiting more from overseas sales than its sales in the UK, according to the figures released on June 3.

ASOS, established in 2000, has seen a consistent increase in its popularity and sales figures, however in recent times; the company has seen an increase in its overseas sales, prompting it to plan expansions to Italy, France and Australia in the coming year. The representatives at ASOS say, “We remain positive about the outlook for 2012 and remain on track to deliver our ambitious plan of £1bn of sales by 2015.”

With the incorporation of the initiatives of free delivery as well as returns, their UK business has delivered a strong performance. The sales rose by 25% to a very positive figure of £184 million despite the extremely competitive environment. This figure, while impressive, is not a very positive one, when compared to the increase in the company’s overseas sales. The announcement of switching to this warehouse has resulted in the bottom-line profits to be pushed down by 23% to £15.7 million.

The company has announced an intention to open a 530,000 sq ft warehouse in the Barnsley area. This move consolidates its four existing site of distribution in Hemel Hempstead. This move will support its range of own label products and 50,000 branded products.

Although analysts say that the results are in sync with the expectations, the shares have slumped 10%, due to the cautious stance taken by investors due to apprehensions about the prospects going forward. Investec analyst Katharine Wynne said, “A recent hammering for shares in rival SuperGroup, after it failed to cash in on warm April weather, highlighted the ‘fragility of valuations in these markets’.” She has a maintained a sell rating on the stock. She has, however, upgraded her underlying profit forecast to £40 million from her previous forecast of £35 million this year.

All this speculation has not stopped ASOS from announcing a move into China. “It is not a question of if but when,” said its chief executive, Nick Robertson, of China. He did add: “We will need to have a partner because we can’t do it independently.” This move is keeping in mind the company’s ambition to become a “global fashion destination.”

Along with its Chinese expansion, ASOS plans to move and expand into the world of Facebook via a store and mobile phone apps. “Mobile is going to be huge,” Robertson said. “This is about the shopping experience coming to you … that could be via apps, on your mobile, on Facebook.” “More than 7% of visitors to the website were already using their phones. This is the next shift in terms of how we perceive shopping online,” he added.

So, despite a slump in the stock and no phenomenal increase in UK sales, ASOS remains ambitious about achieving its £1 billion mark in the next four years, with a global expansion.

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