Shoppers in the UK will face “unprecedented” economic pressure as the cost of living increases and the weakness of sterling pushes up prices, Asos chief executive Nick Beighton said today.
Beighton was speaking after Asos reported that sales increased 37% to £911.5m for the six months to 28 February, while pre-tax profit rose 14% year on year to £27.3m.
He said retailers must push ahead and innovate in order to attract shoppers’ spend in the UK. “The UK customer is going to be more economically challenged than ever before. Credit card debt is at pre-2008 levels and we’ll see more pressure on pricing. The Asos shopper will have inflationary price pressures on her purse.
“Our mission must be to improve our performance, our offer and our engagement and to hold our prices for that shopper.”
UK sales were up 18% year on year in what Beighton described as a “highly promotional market”.
He said discounting in womenswear had been “acute” since November, but insisted that Asos reduced its markdowns and improved stock turn during the six months.
International sales at the company jumped 54% on 2016 figures, boosted by investment in price and a weaker pound.
Beighton said he expected greater pressure on import costs in the second half but international sales would benefit.
“60% of our business is export. When sterling is weaker we are more attractive to overseas customers. It gives us the opportunity to grow our international business, which has accelerated since [the EU referendum on] 23 June. We increased our hedges and invested in price and proposition, we’ll continue to do that.”
He added: “When the pound strengthens we’ll be a bigger business, with more customers, better capabilities, more staff, we’ll be a more resilient business for whatever comes next.”
In particular, Asos saw strong growth from Australia and Russia during the period.
“We invested heavily in the Australian market which had been muted,” explained Beighton. “We’ve seen a resurgence of growth and Australia is now growing faster than the UK. In Russia we invested in price, delivery, speed, tracking deliveries and we’re seeing triple digit growth.”
Asos has upgraded its sales guidance for the full year and expects growth in the 30% to 35% range, up from 25% to 30%.