Asos’ marketing strategy backed despite sales slowdown

The online fashion retailer revealed sales climbed 26 per cent to £136.7m in the two months to February, below many forecasts and down on the 38 per cent in the previous quarter.

UK sales were up 21 per cent, down from 38 per cent in the previous quarter.

Shares in the retailer fell this morning after Asos said increased investments in its online and warehouse offerings will weigh on earnings this year but added the enhancements would lift its sales capacity to £2.5bn per annum, over £1bn higher than previous predictions.

Despite the slowdown in sales David Alexander, retail analyst at Conlumino, says its marketing strategy puts in a strong position.

“Although these results represent a slight tempering of growth from the giddy heights of Asos’s stellar Christmas performance, a minor loss of momentum should not detract from an upward trajectory which has seen the fashion etail powerhouse post stratospheric numbers in recent times.

”That the UK results still demonstrate such positive movement in a market where Asos should be approaching something akin to maturity is all the more impressive this time around given it is facing off against tougher comparatives – it has now been 12 months since the company launched its digital marketing offensive.”

He adds the introduction of “customer-friendly” technology and its buyers and merchandisers’ use of real-time data from blogs and social media in their ranging and buying decisions will also prove successful.

The retailer announced in January it is dialing down digital marketing spend while it identifies more cost-effective channels to lift sales in the long-term. It is already using real-time data to collect information daily from blogs, social media, competitor websites and press mentions, which are then used to inform the merchandising and pricing decisions made by its marketing team.

The number of active customers was 8.2 million as of 28 February up 36 per cent from a year earlier, Asos said.