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Asos ‘well prepared’ for no-deal Brexit

Asos chief executive Nick Beighton has said the business is prepared for all possible Brexit outcomes as the UK’s deadline to leave the European Union looms.

“We were advanced with our Brexit planning and are planning for all scenarios and how they could impact us,” Beighton told Drapers.

“We have commenced a significant investment in our European distribution facility in Berlin, which will be fully mechanised in the next few months.”

Beighton is, however, wary about how Brexit will affect skilled labour resources.

“It’s one of the potential consequences that the movement of skilled labour might not be as forthcoming to the UK as it once was, and we do have a proportion of staff that this may affect,” he warned.

A possible online tax aiming to create more of an even playing field between online and bricks and mortar retailers is another concern for the pureplay.

Beighton said: “For us, it seems the core problem to solve is corporation tax leakage and business rates reform, but we will pay whatever tax the government says we should pay.”

Similar to its Brexit strategy, the online retailer said it was ahead of the game in its approach to new GDPR regulations.

“For the last 18 months we were going through a proper consent journey for our customers and took the view that it was our responsibility to explain how their data was being used on the website. Our use of data was all about making their experience more simple,” Beighton said.

In results for the year to 31 August, Asos posted a 28% increase in profit before tax to £102m despite investing heavily to support its future growth. Group revenue was up 26% on 2017 to £2.4bn. Retail sales were also up 26% to £2.3bn. UK retail sales increased 23% to £861.3m, while international sales were up 27% to £1.5bn.

The business said this year was a period of “peak investment”, focused on the ongoing automation of the European distribution hub and development of the US hub, alongside developing its IT capabilities “to field and cope with growth”.

Asos invested £242m of capex in the year, and expect FY19 to be the last year of negative free cash flow, with its new three year £150m credit facility providing support during the period of heavy investment.

Technology developments at the business include launching voice search with Google Assistant, which Beighton hopes will “take away the friction” and provide a more natural way for customers to engage with the brand moving forward.

Asos is scrapping its A-List loyalty scheme from the 24 October to focus on its Premier service, where shoppers pay a flat fee for year-round next day delivery.

“We thought we’d simplify the customer experience given that the data that we were seeing was that customers were migrating towards our premier offer.”

Beighton added:” We’ve seen a higher engagement through premier and can ramp it up to more of our customers globally”

 

 

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