• Asos' share price was down 11.5% to 5,752 pence at 9.27am GMT this morning.
  • Retail sales increased 22% - slower than growth of 32% recorded a year earlier.
  • CEO Nick Beighton said the company has been managing demand around a number of key infrastructure programmes.
Asos is preparing to open a warehouse in Atlanta and phase two of its Euro hub in Berlin

Asos is preparing to open a warehouse in Atlanta and phase two of its Euro hub in Berlin

Asos has blamed investment in a number of key infrastructure projects in the US and Europe for a slowdown in sales in its last quarter as the online fashion retailer lowered its guidance for the full year.

In a trading update for the four months ended 30 June, retail sales increased 22% to GBP802.7m (US$1.06bn). This was slower than growth of 32% recorded a year earlier.

Asos' share price was down 11.5% to 5,752 pence at 9.27am GMT this morning following publication of the results.

Group revenue was up 22% to GBP823.9m from GBP675.8m. The company, however, is expecting full-year sales to be towards the lower end of previous guidance of 25-30% growth.

On a media call this morning (12 July) to discuss the results, CEO Nick Beighton said that as well as managing 22% [retail sales] growth, the company has been managing demand around a number of key infrastructure programmes.

"We're opening an Atlanta warehouse for the first time in a couple of weeks, and in the first weeks of September we'll be implementing phase two of the Euro hub in Berlin," he told journalists. "So there are certain quarters where you go through growth and certain quarters where you manage demand around your infrastructure periods. The last four months has been categorised by that. But it's still a very strong performance."

UK retail sales, meanwhile, were up 23% to GBP288m, and international retail sales up 21% to GBP514.7m thanks to infrastructure and proposition investments. Retail gross margin improved 130 basis points, ahead of plan.

Beighton said the result in the UK was "a lot stronger than we though [it would be] in what is a tough market", while EU growth was at 31%, for which analysts had expected more, he added. 

"This is nothing to do with currency or any material change in competition, it's just about us having a different focus for the four months ahead of infrastructure change. And the infrastructure change in the US and Berlin is pretty important.

"A year ago I said the capacity we are building this year will give us GBP4bn sales throughput capability within the next 12 months. But that's not the end of Asos' trajectory. It will mean Asos will continue to grow for longer and a much bigger business on the back of it."

For the full year, Asos expects pre-tax profit to be in-line with consensus forecasts and gross margin to improve around 100 basis points.

Referring to investment in technology, Beighton said the company is "very excited" about Artificial Intelligence.

"It will be a game changer for us in terms of customer experience and in terms of lowering the cost for certain customers. In the period just reported we launched a consumer chatbot that has now gone live. Equally, voice interaction will become bigger for customers in improving the experience, as will how we manage delivery and customer care. That will be a game changer for experience and lowering costs."

Sofie Willmott, senior retail analyst at GlobalData, says that with such a strong track record and high expectations from stakeholders, the company must continue to innovate at a rapid pace to remain a leader in the online market.

"Newly-appointed chairman Adam Crozier has joined the retailer at a time when it continues to far outperform its multichannel competitors, however sustaining high levels of growth will be a challenging task."