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In the early days following the birth of his company, a CEO friend of mine who demanded a minimum 15% sales increase year-on-year during each period, paradoxically warned his staff to maintain a low profile because “The higher you raise your flag, the more people there are who will shoot at it.” Nick Robertson, CEO of Asos (LSE:ASC) must feel the angst of, on the one hand, continually returning double digit increases in revenues and profits, whilst on the other hand taking potshots from know-it-alls who claim that he is disrupting High Street’s traditional way of doing business.
In a statement released this morning as part of Asos’ year-end report, Robertson said, “During the year we continued to make progress towards our goal of being the world’s number one fashion destination for 20-somethings. We reached the milestone of 7 million active customers worldwide, following significant investment in our product offer, delivery options, customer experience and marketing.”
He was commenting on Asos’ strong performance for the year ending 31 August, during which the company reported a 40% increase in retail sales and a 23% increase in pre-tax profit. Asos earned £54.7 million in profit on revenues of £754.o million. Robertson had set the course toward his target of £1 billion in sales some time ago. He now says that the “target is firmly in our sights.”
What’s a CEO to Do?
So, you drive results to record levels at a breathtaking speed. What do you get in return?
- Asos share price drops 201.0 pence (3.71%) from 5,413.0 to 5,212.0 during the first six hours of trading following the release of yet another excellent report.
- Naysayers, who probably had tickets at the finish line of the 1,000 meter race at the 2012 London Olympic Games, are saying that the rapid rate of growth cannot be sustained. To them I would say, check out Asos’ fundamentals. As a rule of thumb, I agree that too much growth too quickly is generally not a good thing. However, you have got to account for champions somehow. In order to win the race, you have to run faster than the “rule of thumb” guys who finish behind the champion. As Robertson said this morning, “The results speak for themselves.”
- Fools who claim that Asos is disrupting High Street. Come on folks. What are you thinking? Of course, Asos is disrupting High Street. It is not Robertson’s responsibility to conform to tradition. It is to grow a successful business. Successful businesses do disrupt the way we always done things.
Changing the Past. Creating the Future.
In the 13 years that Asos has been in the UK, it has increased its sales volume by 34% against all odds in the retail sector where the suffering has been apparent for most shops. Robertson developed a successful strategy that defied circumstances whilst other retail CEOs and COOs were crying in their beer. I challenge readers to show me a chart for any other retailer that can match the performance of Asos from 2008 through today. On 31 December 2007 Asos shares were selling at 267.0. On 16 September 2013 the price peaked at 5,701.0!
Asos is crossing lines with its retail lines that no one else had either dared to cross or had the foresight and vision to consider crossing, offering brand names that you are not supposed to offer to every Tom, Dick, and Harriet.
I say, “More power to you, Nick. Outstanding strategy. Phenomenal performance. Fantastic future.”
