Business World

Tuesday 23 September 2014

Shares in ASOS slide on spending plans

Neil Maidment

Published 19/03/2014 | 02:30

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Employees make notes during a meeting at Asos headquarters in London
Employees make notes during a meeting at Asos headquarters in London

Shares in British online fashion retailer plunged to a five-year low yesterday after the firm said it would increase investment in its warehouses and IT systems to meet increasing demand at the expense of short-term profits.

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Founded in 2000 by chief executive Nick Robertson, ASOS has been the success story of British retailing in recent years, attracting fans such as singer Rita Ora.

To help cash in on rising online demand, the firm said capital expenditure would increase this year to at least £68m (€80m) from £55m as it steps up investment in IT and in its British and German warehouses.

The investment, which will help speed up deliveries and cut costs, will push the firm's annual sales capacity to £2.5m within a year, ASOS said. However, combined with investment in its China start-up, the company warned that the capital expenditure hike would reduce its 2013/14 operating margin to 6.5pc, below the 7pc expected by analysts.

ASOS shares fell as much as 22pc, the biggest one-day fall since October 2008, wiping £720m off its market value, as analysts pencilled in the drop in profits. (Reuters)

Irish Independent

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