With online annual sales growth rate of 35 percent for the trailing 12 months, according to S&P Capital IQ, Asos is also able to maintain a gross margin rate of nearly 50 percent with pre-tax earnings showing a 5 percent annual gain.
It’s consistent results such as these that drove retail analytics firm Edited to take a deep look into the online fast-fashion retailer’s market performance to cull insights that might help other brands. “In an industry plagued by record-breaking store closures, bankruptcies and an over-reliance on discounting, not many retailers can claim [such a high] sales increase,” researchers at Edited said in their report adding that Asos is bucking current sales trends as it continues to grow globally.
In an evaluation by Katie Smith, senior fashion and retail analyst at Edited, “newness drives the business,” she said. “Nearly half (41 percent) of the fast-fashion retailer’s current offering arrived in the last three months, with between 2,500 to 7,000 new products coming in every week,” Smith said in her report. “Asos also batches specific styles, positioning it as an authority on trends.”
“Asos’ ability to grow in an increasingly crowded marketplace is an impressive feat, based on a careful combination of factors leading to bottom-line growth,” Smith said. “By moving quickly to offer a strong depth and breadth of assortments, Asos is viewed as both an attractive and highly convenient retailer to the consumer.”
Smith noted that Asos doesn’t focus on “being the cheapest. In contrast to other fast fashion retailers, it sells ‘exclusive’ brand products (5 percent of its branded offering), allowing it to merchandise at higher price points,” Smith said. But when it comes to markdowns, the discounting it strategic, she said in the report.
“Asos partitions its reduced products into an ‘outlet’ section (17.6 percent of its offering) on the website rather than allowing its main offerings mingle with too many price slashes,” Smith explained. “This means only the most ardent shoppers will know to look for outlet sales — in fact, Asos even introduces new branded products directly into this section.”
Smith said that discounts “beyond this are mostly promotional, driven by email discount codes.” Anchoring this strategic discounting approach are “core items,” which make up 8 percent of the product mix. “These include black/blue denim for men and women, Birkenstocks, Nike and Converse footwear, simple own-branded shirts and blouses, and items from its Asos Curve and Maternity lines,” Smith said.
The analyst also said that Asos’s “brand mix” includes its own private label lines, which are one-third of its total assortment, and “extends across petite, tall, plus size and maternity lines” and that it also “focuses on niches like wedding and vintage assortments, allowing it to appeal to a diverse demographic.”
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