Asos is to spend £2m of the cash saved by closing its Chinese business on boosting operations in the UK, US and Europe.
Shares in the online fashion retailer rose more than 7% to £36.47 on Tuesday after it said UK sales increased 25% in the six months to 29 February and it was on track to achieve expected full-year sales and profits.
“I’m pleased with progress on a number of fronts. These results demonstrate improving momentum in the business,” said Nick Beighton, the chief executive who took over from co-founder Nick Robertson last year.
Pre-tax profits rose 18% to £21.2m as group sales climbed 21% to £667.3m in the half year despite £2.7m of losses at the Chinese operation, which Asos last week announced it would be exiting.
Beighton said Asos was combining technical innovation, such as using Snapchat and Instagram to contact customers, with improvements in service and pricing to win over shoppers. In the UK, 70% of Asos’s traffic and half its sales now come via mobile devices – up from virtually zero five years ago. The fastest growing sales channel is through its own iPhone app.
The next development in service is to offer every European customer free returns by the end of April – taking the service to 29 countries rather than the five, including the UK, in which it is now offered. The company will also be taking the physical version of its customer magazine into Germany - its third market after the UK and France.
Beighton said it had not been a mistake to set up a local Chinese operation, despite the £10m cost of exiting the venture after three years of losses.
Asos initially spent £9m launching the local service in 2013, £3m more than it predicted, and the unexpected costs contributed to a slump in its share price in 2014. The company’s shares are now valued at just over half the peak of about £70 enjoyed in February 2014.
But Beighton said: “A business like ours needs to make investments, learn from those investments and be brave enough to back ones that work and change ones that don’t work. There are better opportunities in markets where we have got proven opportunity ahead of us and can really deploy capital in a better way.”