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Asos CEO shifts focus to infrastructure

Asos chief executive Nick Beighton has defended the slowdown in the rate of growth at the etailer, saying the business has shifted its focus to investing in its infrastructure.

Nick beighton (2)

Nick Beighton

A trading statement published on 12 July showed retail sales at Asos for the four months to 30 June increased by 22% year on year to £802.7m. Year on year, the rate of growth was 10 percentage points lower than the same period in 2017, when sales were up 32%.

Beighton said: “We had a different focus for this quarter, and it is pretty important that we land key infrastructure changes in the US and Berlin.”

A new warehouse in Atlanta in the US is due to open in two weeks.

Meanwhile a 800,000 sq ft warehouse in Berlin has been working at half capacity for the last 10 months and is expected to function at full capacity from September.

Both projects are expected to cost between £230m and £250m this year.

Asos’s share price dipped 10.68% following the results announcement. However, Beighton stated investors understood and backed the infrastructure plan, adding that despite a divergence from a business focus on growth, the company had shown strong performance with a 20% increase in active customers to 18 million.

During the period margins had risen 130 basis points as a result of less discounting.

“We feel retail has a heavy promotional presence, particularly in the UK,” said Beighton.

“We have not followed that, so our gross margins are much higher than anticipated. We invest hard in products, make sure that it is the right price when we put it online.”

As a global tech leader, Beighton dubbed artificial intelligence the tech “game changer” for retail, and said he expected it to improve customer experience and lower the cost to serve customers. Voice interaction was also highlighted as an area that will likely become more integrated in the fashion retail sector.

Elsewhere, Beighton maintained that current marketing would remain customer-facing through email communications, rather than collaborations with influencers and TV programmes, such as Missguided’s campaign with ITV reality show Love Island.

 

 

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