Asos expects short-term Brexit benefits

Asos is bracing itself for any negative impact of Brexit by capitalising on the short-term consequence from the exchange rate.

The online retailer's CEO, Nick Beighton, said he anticipates difficult long-term consequences from the referendum result, but in the short term expects his international business to benefit from the weaker exchange rate.

"With 55% of Asos sales being outside the UK, the exchange rate will give a happy consequence to our customers," he said on a media conference call this morning.

Beighton said any extra sales generated from the exchange rate will be reinvested into the business and the customer proposition.

"I'm sort of expecting difficulties with cross border trading with things like tariffs, our response is to take the short-term benefit from the exchange rate and re-invest it back into the customer proposition, build a bigger business, so when those tariffs and/or difficulties become clear, we're in a better place to soak it up," he said.

"We will invest quicker and harder in customer proposition."

Following the UK's decision to leave the European Union last month, it is unclear – and unlikely – British companies will continue to benefit from the Digital Single Market, which addresses many concepts of online trading, including standardising VAT, data roaming, geoblocking and digital borders, copyright and intellectual property.

In the longer-term, Beighton said the warehouse Asos has built in Berlin, which is due to start processing orders from February 2017, will help to alleviate the burden of leaving the EU.

"With that warehouse in Berlin – which is the same size, and has the same automation and processes as the Barnsley warehouse – we will effectively be fulfilling within the European Union, even if the UK comes out," explained Beighton.

Over the last quarter, Asos has rolled out free returns throughout the EU, as well as next-day delivery, while standard delivery in the EU has been improved to four days.

The e-tailer announced strong sales for its third quarter ending 30 June 2016, with growth of 30% (26% on constant currency basis). Meanwhile, international sales increased 31%, with 32% growth in the EU.

Its active customers, who have shopped at Asos in the last 12 months, have continued to grow, with a count of 12 million at the end of the quarter, up 24% year-on-year, many of which are shopping on mobile as the retailer reported 70% of site visits now come from mobile devices.

Asos also shipped a record 3.3 million units during one week over the last three months, which was bigger than its Black Friday performance.