ASOS invests for the long term

The investment in the 530,000 sq ft Barnsley site is part of ambitious expansion plans to increase the floorspace by 25 per cent and mechanise the entire operation.

ASOS’s chief executive Nick Robertson said the group has “never been about the short-term” as he outlined a £68m investment plan to more than double annual sales capacity to £2.5bn.

This is a perennial question for PLCs and something former Asda chief executive Andy Bond was relieved to leave behind when he quit Asda three years ago.

Many thought that Bond’s next step would be the chief executive of a FTSE 100 company, but he says that was never on his agenda.

“What I’m doing is not my second choice, it’s my first,” he said at the time.

“Life at a FTSE 100 company is not for me. You don’t run the company any more, you run the media and shareholder activity.”

Many companies that ditch their stock market listing to go private express similar relief.

There is a feeling that listed companies cannot plan for the long term as they are constantly being badgered by investors for short term gains with no thought for the company’s prospects five years down the line.

Mr Robertson has put in such a good performance over the years that he has proved his track record.

Maybe Marks & Spencer’s biggest problem has been its lack of long term strategy - no-one is clear who its target audience is.

As it has discovered, you can’t cater for leggy teenagers and octogenarians in the same store.

ASOS is brutally clear about its target audience - twenty-something fashion lovers.

It reaches them through daily global edits onasos.com, its online magazine and social media and delivers purchases for free from its UK warehouse in Barnsley to 234 countries around the globe.

It’s a tried and tested model. The clothes aren’t cheap, but this target market is happy to pay the price to emulate high fashion icons such as singer Rihanna, presenter Alexa Chung and model Kate Moss.

The interesting thing is it also attracts a lot of women in the thirties, forties and fifties and counts US First Lady Michelle Obama and the prime minister’s wife Samantha Cameron among its fans.

These women are happy to buy into the high fashion ethos. While the skimpy styles of Rihanna may not be for them, they can buy into high fashion’s more sober offerings.

Mr Robertson is right to tell investors that long term growth is far more important than short term gains.

Cash is being re-invested in the business rather than pay out dividends, but this is under regular review and shareholders will be rewarded over time.

Short term thinking doesn’t build great British companies.

Investors need to be in it for the long haul and their prize will be much greater.

While the company is doing well in the UK, it needs to spread its wings and aim for global growth.

ASOS attracts 71 million visits per month to its websites and it had 8.2 million active customers in the last year, of which 3.2 million were in the UK, which shows how much headroom it has to expand abroad.

ASOS already has nine local language websites in the UK, US, France, Germany, Spain, Italy, Australia, Russia and China.

It launched in China last October, costing the group £3.7m in the first half, with overall spend in the year to August 31 expected to total around £9m, as it launches into this massive market.

Last year it became the most visited fashion website in the world for 18 to 34 year olds.

The scope for growth is phenomenal and it is good news for the region that ASOS has put Barnsley at the centre of its master plan.