Asos capitalised on opportunities to grow its international business when the value of the pound fell following the EU referendum, helping overall retail sales to soar 36% despite challenges in the UK fashion market.
“We set ourselves up, following the weakness in sterling after the Brexit announcement, to capture that opportunity, build our business and attract customers,” said Asos chief executive Nick Beighton, after the etailer reported its trading results for the four months to 31 December.
“The immediate weakness meant that we invested in price, captured the weakness and the benefit in sales and invested heavily in the proposition.”
This manifested in improved delivery in countries such as Russia, where delivery time was cut from 28 days to seven, and Australia, where Asos introduced free returns.
Prices were lowered in the US, as well as in Russia and Australia. “That’s put us right on the leading edge of delivery propositions and also price,” said Beighton. “Delivery and price are very enduring in customers eyes and customers will have benefitted.”
Despite the positive impact these investments had, Beighton noted that he didn’t think any retailer would be immune from the challenges facing the retail industry, and said import pressures were likely to impact the business. “I’m expecting to increase our UK manufacturing from around 4% to 9% and I’m expecting some import pressures on the non-UK-sourced product,” he said.
“We expect to have the ability to mitigate some of those cost pressures with our suppliers. My intention is to hold prices for our customers, while giving a fair deal for our suppliers at the same time.”
As a result of the booming international sales, Beighton announced increased investment in to maintain performance, with capital expenditure guidance set to increase to between £150m and £170m.
This will be invested into Asos’s underlying tech capability, operational capability, accelerating automisation and mechanisation in its European hub. The investment will also bring forward development of a new US warehouse, potentially increasing capacity 10-fold.
Beighton conceded that UK sales were slightly behind expected levels, growing 18%, and attributed the difference to a more promotional market.
Black Friday strongly impacted sales for the period and outstripped Christmas. Sales were up 45% and visits up 35%, a record cyber week for the etailer.
“We now see a bigger spend profile and share of traffic, share of wallet than we do over the Christmas period, which indicated how much the consumer has changed over the past three years,” said Beighton.