Koovs crashes after Asos-alike warns of higher costs and funding needs

2nd Apr 2015 09:55

Shares in India-focused online fashion retailer Koovs, where former Asos director Lord Waheed Alli is chairman, took a big tumble on Thursday after the company warned it planned to raise new funds as marketing costs soared.Koovs's management, which includes former Asos creative director Robert Bready and his design and buying team based in London, said it expected the cost of marketing in the year to 31 March 2015 to be 210m rupees (£2.1m) higher than originally anticipated at roughly 320m rupees (£3.2m).This is likely to lead to a larger loss than the market expected."We now expect these higher costs to continue, reflecting the rapid rate of growth in the Indian e-commerce market," the company added.Baron Alli, who was chairman of Asos until November 2012, nevertheless pointed to very strong growth in the past year, with net sales up 268% to £2.65m, accelerating from November's encouraging interim results."We are pleased with the progress made in our first year. By any standards we have delivered exceptional growth as we continue to strengthen our fashion-forward credentials in India."But with an Indian e-commerce market that local market research firm Technopak forecasts will mushroom from $2.3bn to $32bn over the next five years, he said management want to build on the momentum achieved so far and "seize the opportunity available to us".Marketing costs for the Koovs.com website, which continues to bear a strong similarity to Asos.com, were higher than had been anticipated due, he explained, to the pace of growth in the Indian economy.Further funding will be sought in due course, Alli said.Shares in Koovs were down 44% to 65.9p by 10:20 on Thursday, despite Alli topping up his stake in the company with a £99,125 purchase at 65p.