Asos Unveils Chinese Entry Plan as First-Half Profit Jumps

Asos Plc, the U.K.’s largest online-only fashion retailer, plans to further expand its global footprint in October by entering China.

The debut website in the world’s most populous country will follow the start of a business in Russia next month, Asos said today as it reported a 19 percent increase in first-half profit.

Asos is seeking to further increase the proportion of sales from international markets to maintain a growth record that has seen revenue more than triple in three years. International retail sales accounted for about 61 percent of sales in the first half of the fiscal year, the London-based company said today, including businesses in the U.S., Australia and Germany.

“Having reached a landmark 6 million active customers worldwide, the full-scale launch of these platforms will undoubtedly consolidate Asos’s position as a global fashion destination,” Anusha Couttigane, a consultant at market researcher Conlumino, said of the Russian and Chinese sites.

Asos rose as much as 3.9 percent in London trading and was up 3.1 percent at 3,170 pence at 9:04 a.m. That boosted the stock’s gain this year to 18 percent.

An internal review found that a new operating model was necessary for China as shoppers demand next-day delivery and a high level of customer service, Chief Executive Officer Nick Robertson said today in a phone interview.

Technology Platform

The Chinese business will differ from Asos’s model in other nations in that it will have its own technology platform, a local third-party distribution center and a larger team in the country, costing as much as 6 million pounds ($9.3 million) a year for the first two years, according to the statement.

“It’s the first time we will have stock outside the U.K., because of difficulty of getting individual parcels into China,” Robertson said. “Customer expectations in China are strong, they expect next-day delivery service. Customer care is all live chat, and phone-based.”

The business will be based in Shanghai and will hire more than 25 workers, having already recruited a former Inc. executive as managing director, the CEO said. That compares with typical country teams of about 10 people.

The products, which will start with about 10 percent of the full Asos range, will be predominantly own-brand.

Higher Profit

Asos said pretax profit rose to 25.7 million pounds in the six months through February, matching the average estimate of six analysts compiled by Bloomberg.

“Momentum is strong, and we remain positive in our outlook for 2012/13,” Robertson said in the statement. The retailer reiterated its target of 1 billion pounds of sales by 2015.

Asos’ largest shareholder, Danish supplier Bestseller, is unlikely to make a bid, the CEO said. Bestseller owns 28 percent of the shares, according to data compiled by Bloomberg.

“There’s been speculation in the market for a long time, but that’s not the impression I get,” Robertson said. “They are comfortable sitting on a large slice of the business.”

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