Asos chief Nick Robertson has swept aside rumours that the online fashion retailer is about to be swallowed by Amazon, declaring the internet company was not his “dream partner”.
The company’s shares soared 16% to £22.60 yesterday, even as it delivered a 14% fall in profits for the year to 31 August, hit by £9m of losses in China and heavy discounting. But investors breathed a sigh of relief that Asos had delivered sales growth in line with expectations, revealing a 27% rise for the year to 31 August.
After a tough year – in which Asos suffered from a fire at is warehouse in Barnsley while overseas sales were hit by the strength of the pound, leaving the company with unwanted stock to clear at low prices – the shares have slumped from a peak of £70.50 in March this year.
Robertson said that the hit to profits was necessary to build a global business and investors should keep their eyes on that “very big prize”.
He added: “We are in a period of major investment that comes at a short term cost, but the medium-term benefits will be significant. he said.
He admitted sales growth would drop back to between 15% and 20% in the current year and profits would be flat as Asos invested further in IT, distribution centres and price adjustments in overseas markets, but he said a tie-up with a bigger partner like Amazon was not the obvious solution.
“Is (a potential merger) about product? Our product is amazing. Is it about warehousing? That is quite cheap to get hold of. Is it about technology? Well yes, but is there somebody we could plug in and be way off into the stratosphere? Well no. We can’t just plug in Amazon,” Robertson said.