ASOS invests £20m in new distribution centre

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Online fashion retailer ASOS is investing £20m in a new distribution centre to aid its expansion. It has secured ProLogis’ 530,168 sq ft Crossflow 530 building in Barnsley, South Yorkshire.

ASOS delivered sales of £223 million in the year to 31st March 2010, an increase of 35 per cent and profit before tax of £20.3 million, an increase of 44 per cent.

ProLogis was marketing the cross-dock facility with a headline rent of £3.95 per sq ft through letting agents BNP Paribas, Dove Haigh Phillips and Fisher Hargreaves Proctor.

In its annual results, ASOS reported that warehouse costs increased by 25 per cent to £19.4 million, but the operating cost ratio reduced from 9.4 per cent last year to 8.7 per cent.

Finance director Nick Beighton said: “In the first half of the year we upgraded our warehouse management systems at our Hemel Hempstead warehouse. This resulted in productivity gains in the second half of the financial year.”

For the new warehouse it is forecasting £20 million of capital expenditure in this financial year.

“We expect that this investment will enable the group to fulfil £600 million of annual sales capacity with further expenditure in 2011/12 of £13 million and then £6 million in 2012/13, which will further increase the sales capacity.

“The capital expenditure in relation to the warehousing will return to a more normalised level thereafter. These additional investments, which are dependent on the future sales trajectory, will create further sales fulfilment capacity for the group to satisfy demand from both our UK and international markets,” said Beighton.

ASOS introduced free returns to all UK customers in September 2009 and in April this year it introduced free supersaver delivery in the UK.

Chief executive Nick Robertson said: “In addition we launched ASOS Premier, an annual subscription service charged at £24.95 entitling customers to a free next day delivery and free returns pick-up on an unlimited number of orders over a 12 month period.

“We also offer a returns pick-up service for all customers charged at £2.95. We are very pleased with our customers’ reaction to these initiatives, impacting our main KPI’s with positive trends in order frequency, average basket and items per basket. The financial impact is all within budgeted levels.”

ASOS plans to improve the delivery options further allowing customers to order on ASOS and pick up at locations other than their home or office. “A number of conversations are ongoing with leading retail brands in the UK and we should be able to report on progress in the next few months,” said Robertson.

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