ASOS sets £2.5 billion sales target despite fall in profits

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The boss and founder of ASOS was defiant in the face of a 14 per cent fall in profit as he set an ambitious target for £2.5 billion in sales.

The shares soared nearly 16 per cent to 2249p on relief that the results were not as bad as feared, but are down more than 66 per cent since the start of the year.

The online fashion retailer has had a torrid year and issued three profit warnings as it was hit by a warehouse fire, the strong pound and increased investment costs.

But chief executive Nick Robertson was defiant despite the critics and said: “Despite all that happened this year, we still delivered 27 per cent growth in sales, with the UK a standout performance at 35 per cent growth. What other retailer has this growth?”

The website, which targets “20-something” followers of fashion, said pre-tax profits tumbled 14 per cent to £47 million for the year to the end of August, on sales of £976 million.

Overseas sales growth slowed to 22 per cent— half what it was a year ago — hit by the strong pound. Asos now has 8.8 million active customers, up 25 per cent on a year ago.

It announced that chief financial officer Nick Beighton will take the newly created post of chief operating officer. Robertson said it was not succession planning but “strengthening of the management team” and that he was “not going anywhere”.

Robertson added: “We are in a period of major investment that comes at a short term cost, but the medium-term benefits will be significant.” It has launched a website in China, opened new warehouse and distribution hubs in the UK and Europe.

John Stevenson at Peel Hunt said: “Management has come out fighting, targeting £2.5 billion sales base, with a statistic-heavy and achievement-focused statement. While this is likely to lift the shares today, medium-term earnings margin aspirations of 6 per cent by 2020 dulls our enthusiasm.”