Asos first half profits fall

British online fashion retailer ASOS posted a 10 per cent fall in first half profit, reflecting investment and lower prices, though the firm said it was confident full-year profit and margin would be in line with expectations.
ASOS distribution centre near Barnsley, South Yorkshire.ASOS distribution centre near Barnsley, South Yorkshire.
ASOS distribution centre near Barnsley, South Yorkshire.

The company, which issued three profit warnings last year, said on Wednesday it made a pretax profit of £18m in the six months to February 28.

That compared to analysts’ average forecast of £16.3m and £20.1m made in the same period in its previous financial year.

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ASOS’s investment in international prices resulted in a gross margin decrease of 230 basis points during the period. That and increased investment in distribution capacity reduced the profit outcome.

Chief executive Nick Robertson said: “With our continued investment in our international price competitiveness gaining traction, momentum in the business is building. This gives us confidence in the outlook for the second half.”

ASOS’s first-half retail sales, reported last month, rose 17 per cent on a constant currency basis to £536.4m, with UK sales up 27 per cent and international sales up 10 per cent.

Analysts are on average forecasting a 2014-15 pretax profit of £45m down from £47m in 2013-14.

Shares in ASOS, down 30 per cent over the last year, closed Tuesday at 3,629 pence, valuing the business at £3.03bn.