Asos chairman admits 'over-investment' in China after sluggish year

Asos chairman Brian McBride has admitted that the company took on "too much too soon" with its launch in China.

Asos: admitting errors in China
Asos: admitting errors in China

His comments follow a turbulent year for Asos, which issued three profit warnings this year off the back of sterling’s strength against other currencies, warehousing issues and the launch of the business in China in 2013.

The company halted its international expansion in April, and last month posted a 14% drop in annual pre-tax profit to £46.9m.

Speaking at The Marketing Society annual conference, McBride said the China launch had been tougher than expected.

China did require a lot of management attention, time and a disproportionate amount of investment, so that’s why it did have an impact on the bottom line

He told Marketing: "In the grand scheme of things, China is a tiny, tiny fraction of our total turnover. But it did require a lot of management attention, time and a disproportionate amount of investment, so that’s why it did have an impact on the bottom line but not at the top."

Speaking at the event, he added: "We probably overinvested in China, we ran at it too quickly and there were lots of great learnings but we took on too much too soon."

McBride pointed to cultural errors such as trying to offer one seasonal range in a country which has multiple climates in different regions. CEO Nick Robertson has also previously highlighted issues such as meeting Chinese rules on the clothing trade.

But McBride, formerly managing director of Amazon UK, was bullish on Asos’ growth. He pointed to the company's rising sales and said the aim was to boost its share of the UK fashion market from 3% currently to 10%. 

He said: "My sense is the growth that we’ve been enjoying, certainly double-digital growth, is out there for as far ahead as we can see. Why’s that? Because the move to online continues, more shopping and retailers are going online."

"For those businesses that know their customers and know them well like Asos, you’ve got that chance of growing and increasing your share of the market.



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