Asos faces brand label revolt over discounting

Asos relies heavily on selling products from a collection of fashion brands include New Look, Karen Millen, and Reiss, although it also sells own-brand lines.

However The Sunday Telegraph understands that some of the leading brands are frustrated with the discounts Asos has offered on their clothes, particularly in the run-up to Christmas last year, and have threatened to pull out.

One retail chief executive, who asked not to be named, said that Asos was “damaging their brand” and that Next’s new online and catalogue service, Label, was emerging as a viable alternative for disillusioned retailers.

No major retailers have pulled out of Asos yet and the company remains a significant source of sales for fashion brands in the UK and abroad. However, some retailers that sell through Asos in the UK have prevented the company from selling their products overseas.

The concerns of the brands adds to the challenges facing Asos. The company issued its third profit warning of 2014 last week after telling investors that it will have to spend heavily to try to reverse a slowdown in international sales.

Shares in the online retailer are down by more than 65pc year-to-date, with investors concerned about the company’s shrinking margins. Asos was founded in 2002 and became one of the UK’s online success stories. The company was valued at £6bn before the run of profit warnings.

Nick Robertson, the chief executive and co-founder, has insisted the company’s prospects remain bright and that it is investing heavily in new infrastructure to “seize the opportunity”.

On the concerns of brands, a spokesman for Asos said: “Asos will not comment on their customers/ brands or their relationship with them.”

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