Bullish Asos spends big to break America
The boss of Asos was bullish on Wednesday as he revealed plans to plough more cash back into the business to turbocharge it after a jump in profits and sales.
Investors have voiced concerns this year, reflected in the share price, about Asos’s aim to spend up to £250 million a year in the next few years to help build warehouses in Europe and the US.
The business, started 17 years ago and now selling more than 87,000 branded clothes and its Asos Design brand in more than 200 markets, said its “substantial” investment continued apace.
Chief executive Nick Beighton said: “Investment is important for future growth and we’re eyeing up a much bigger prize than where we’re currently at. We’re ramping up our capabilities faster than ever before.”
In April, Asos said it was aiming to make sales of £4 billion. Today it delivered sales of £2.5 billion — two years earlier than forecast — up from revenues of £1.9 billion last year. Pre-tax profits jumped 28% to £102 million and the shares followed, up 666p at 5666p.
“Another notable positive is the group hasn’t exceeded its investment budget. That’ll be a relief for investors as… Asos hasn’t always had the strongest grip on expansion costs,” said George Salmon, an analyst at Hargreaves Lansdown.
Investec’s Ben Hunt, however, was bearish. “We remain negative with concerns that margin pressures are building and other levers to mitigate margin headwinds are dissipating.”
Beighton is focussing on “Collusion”, a new brand for teens, to boost sales. Asos said it is still seeking a finance chief, more than six months after Helen Ashton said she was leaving.
