It’s been a difficult six months for ASOS. The fire that broke out at its Barnsley warehouse in June couldn’t have come at a worse time than when its share price was looking set to recover after falling from its previous peak of 7,050p in February. Shares have been on a volatile and generally negative trajectory since, falling 65% since the beginning of the year.
But today it looks like the fashion retailer is flavour of the month (or at least the day) again as it announced its annual results. Shares jumped 18% in early trading despite a 14% fall in pre-tax profits. Investors seem to have been pleased with the company’s 27% boost in sales, including 35% growth in the UK market.
Credit: Yahoo Finance
Its overseas expansion has been hit by the strong value of the pound, although they’ve still grown by 22% in the past year. Until now, overseas prices have been set by converting UK prices to local currencies, but ASOS will soon introduce a 'zonal' price system to combat the problem of exchange rate swings.
‘We are in a period of major investment that comes at a short term cost, but the medium-term benefits will be significant,’ CEO Nick Robertson said. ‘ASOS has always been about the longer journey to a very big prize: to be the world's leading fashion destination for 20-somethings, and we are firmly focused on our next staging post of £2.5bn sales.’
To this end ASOS also announced today it would be promoting current CFO Nick Beighton to COO, freeing up Robertson to focus on growth strategy, customer experience and marketing. A reshuffle of the top team and action on foreign exchange risk are all well and good, but the fire at its warehouse shows that ASOS needs luck on its side to make international expansion a success.