(Bloomberg) -- Asos Plc fell the most since the U.K.’s vote to leave the European Union after the online fashion seller said it would step up investment to maintain its rapid growth.
The London-based seller of hoodies and jeans said it plans capital spending of 230 million to 250 million pounds ($327 million to $355 million) over the next two years, up by 30 million pounds from its previous forecast range. The company reported first-half sales slightly below analyst expectations.
The shares fell as much as 12 percent, the most since the day after the June 2016 Brexit vote.
“Asos’s issue is that while it’s nailing the revenue side of the profit equation, costs seem to have a life of their own,” Nicholas Hyett, an analyst at Hargreaves Lansdown, said in a note. “What’s disappointing about Asos is its tendency to underestimate capex requirements by some tens of millions a year.”
Asos joins Berlin-based online fashion retailer Zalando SE in increasing investment in growth, as e-commerce competition from the likes of Boohoo.com Plc, Yoox Net-A-Porter Group SpA and Amazon.com Inc. increases. Asos said it will focus spending on distribution and logistics operations.
“The level of growth over the recent years remains at the top of our medium-term planning assumptions and we need to invest more quickly in our business to support this momentum,” the company said in a statement.
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