Asos vows to ramp up its spending on technology and logistics
Online fashion retailer Asos said it would have to step up spending on technology and logistics to help maintain its lead in the online fashion pack, with the extra costs taking a toll on its elevated share price.
The British company, which targets style-conscious twenty-somethings, increased its capital expenditure (capex) forecast after reporting a 27pc rise in sales to £1.13bn (€1.29bn) in the six months to the end of February.
Asos said capex for the full year was now expected to be £230m to £250m, higher than the £200m-£220m it predicted in January. Investment will remain at the higher level in its next financial year.
Investors were unimpressed by the higher costs, sending its shares down 4.7pc to 6,698 pence in early trading.
The company, which is still listed on London's junior AIM market, has an eye-watering price-to-earnings ratio of 92. Its market capitalisation of £5.9bn is more than £1.5bn higher than that of retail stalwart Marks & Spencer.
Asos chief executive Nick Beighton said the company was trading strongly, with visits to its site exceeding a billion in the six months.
"Alongside our investment in our people and our technology, we are accelerating investment in our distribution and logistics, laying the foundation for £4bn of net sales," he said.
The extra money was needed to upgrade its 200 localised websites, and incorporate more artificial intelligence into services like its recommendations engine and visual search, he said. It will also open its warehouse in Atlanta, United States, in July, earlier than planned, he said.