Nick Beighton outlines bullish plans, despite Brexit impact on currency and consumer confidence.
Asos will achieve “major growth” internationally and maintain its momentum in the UK next year as it continues to invest in lowering prices, its bullish chief executive Nick Beighton predicted today.
Beighton dismissed concerns about currency headwinds and faltering consumer confidence in the wake of the Brexit vote, explaining that Asos was confident in its strategy of investing in pricing and logistics.
The etailer slashed its prices in international markets following the Brexit vote in June. As a result of this and a strong performance in the UK, total sales soared by 26% to £1.4bn in the year to 31 August.
“On 24 June we increased our hedges and lowered our prices,” explained Beighton. “We can do that as we see ourselves as an export business. For us, it’s about managing the business, increasing efficiency and leveraging that for our customer.”
He added that there is “a bit more to do” and revealed Asos will lower prices further in the US.
Beighton said any increase in import costs following the drop in the value of sterling would be more than offset by international sales, which now account for 56% of total sales.
He expects total sales to increase by between 20% and 25% next year, while margins will remain stable.
“We’re seeing no issue with consumer confidence at the moment,” said Beighton. “In the final two months of the financial year we saw a 33% increase in UK sales. I’m confident about next year – if you invest in the customer, you will get what you deserve.”
Asos will increase its investment in logistics and IT from £80m to between £120m and £140m next year. It will also add an additional 52,000 sq ft to its north London head office, allowing it to double the capacity of its workforce.
Beighton would not comment on the impending Brexit negotiations but said the business would “plot its resources accordingly” and he was “’confident” the government would do the right thing for retailers.
Beighton said he was keeping a “close eye on” the development of artificial intelligence capabilities, including visual and voice search that will allow shoppers to find products using voice recognition or by taking a picture.
“The way the customer engages with us is changing. Mobile is currently driving the shift in retail but these areas will be the next thing to transform the digital experience and customers adapt quickly, so we will too.”
Pre-tax profit after exceptional items slumped 31% to £32.7m after Asos agreed to make a one-off legal payment of £20.9m to settle ongoing trademark infringement disputes. Before exceptional items, its pre-tax profit rose 37% to £63.7m.