Asos chief defends investment strategy after profit slowdown

 

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The Independent Online

The chief executive of young fashion website ASOS defended his investment strategy and said it will allow the group to be truly global.

Nick Robertson, who founded and runs the £4bn fashion website, warned profit would be below last year’s in a trading update last month as he stepped up investment in infrastructure. In its half year results profit was down 22 per cent.

Mr Robertson said: “The expectations are high but we have to put the infrastructure in place to grow and support this truly global business.”

The group, which focuses on 20-something shoppers across nine local language websites, said the new warehouse and improved supply chain will help its recent expansion into China and Russia as well as put in place the footprint to expand further afield in the near future.

Mr Robertson said the next phase of expansion will be in Korea and Japan followed eventually by India and Brazil.

ASOS brought forward the timing of the planned investment. Mr Robertson defended the decision to spend the £68m in new warehouses and supply chains and said although it had “reduced… profitability” it “will deliver significantly increased capacity as well as efficiencies in the longer term.”

He added: “ASOS is not and has never been about the short-term; the scale of the global opportunity remains as exciting as ever and we are investing for the many opportunities ahead.”

Mr Robertson predicted sales of £2.5 billion within three years.

The website, which sells its own clothing line as well as other brands, reported a £20.1m  pre-tax profit for the six months to March, down from £25.7m in the same period of the previous year. But sales for the period were up 34 per cent to £481.7m.

Mr Robertson said it now has 8.2 million shoppers - up 36 per cent. Its margins were up 60 basis points.

ASOS has also faced issues with currency fluctuation particularly in Russia and Australia. It will look at increasing cheaper own-brand clothing ranges to sell into countries such as Australia that have seen currency rises.

Mr Robertson ruled out opening shops but said the group is trialling locker collection points at its Camden head office.

Barclays’ retail experts said: “The bullish outlook given by the chief executive will likely restore some of the investors’ lost confidence in the company’s growth sustainability. Management justified the investments as necessary for the continuation of growth. We think the recent significant share price drop offers investors an excellent opportunity.”

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