ASOS to expand Barnsley DC by 25 per cent

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Online fashion retailer ASOS plans to extend its Barnsley distribution centre by 25 per cent by 2014 to provide the capacity to meet its £1 billion sales target by 2015.

ASOS, which opened the 530,000 sq ft Barnsley site in mid-2011, has been growing rapidly. In the six months to 28th February sales were 33 per cent on last year at £360m.

The plan to expand the Barnsley site was revealed in the company’s interim results.

It said there had been an improvement in average labour cost per unit over the period of 12 per cent compared to last year – average labour cost per unit during February 2013 was 58p (2012: 71p). It also received HMRC approval to operate a bonded warehouse within the Barnsley site which will enable it to speed up the receipt of inbound stock.

“Following the recent reductions in average selling price per unit, approval has been gained to extend our Barnsley site by 25 per cent by 2014 which will provide capacity to accommodate the required unit volumes to meet our £1bn sales target by 2015 and beyond.”

ASOS said it had increased its investment in operating resources and capability by 36 per cent to £153.9m in the first half, excluding exceptional items (2012: £113.4m), while benefitting from economies of scale.

“Total operating costs ratio improved by 50bps excluding investment in our customer delivery proposition.”

It extended its the next day delivery cut-off from 18:00 to 20:00 and reduced the price of its Premier service.

International sales now account for 61 per cent of ASOS revenue. It has five key strategic country targets: the US, Australia, France and Germany (plus the UK). It also has dedicated web sites in Italy and Spain and is are now focussing on expansion in the People’s Republic of China and the Russian Federation.

The operating model for ASOS China will differ from other international activities and will include a standalone technology platform, local third-party distribution centre, local delivery solutions and payment methods, and a larger multi-disciplinary in-country team.

“This will give us the right platform to provide a proposition tailored to our Chinese customers and to maximise the long-term potential from this exciting market. Our third-party logistics and customer care partners have now been chosen, a general manager has been appointed and we are confident of a successful launch early in the new financial year.”

It expects the cost of setting up the Chinese operation to be £4-6m during each of the years to 31 August 2014 and 31 August 2015.

ASOS expects to launch its Russian next month. It will have a dedicated Cyrillic web site with all fulfilment taking place from the UK hub.

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