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A week ago ASOS, one of the UKās most successful online retailers, announced plans to increase its investment in its warehousing and its IT as part of a longer term growth strategy.
Capital expenditure would therefore increase from Ā£55 million to around Ā£68 million and the outcome in the longer term would be an increase in ASOSā sales capacity by Ā£1 billion. In the short term the companyās operating margin up to August this year would be reduced from 7% to 6.5%.
Almost immediately after the announcement was published ASOSā share value dropped by 20%.
Surely this company was being sensible in planning for growth in the longer term.Ā Isnāt this kind of thinking exactly what the business community should be doing?
Here yet again, we would argue, is an example of the kind of short term thinking that is endemic among investors and other ārentā seekers.Ā Or are we missing something here?