Asos upbeat despite 10% profit fall
Online fashion retailer Asos has reported a 10% fall in first half profits as an investment programme and price cuts took their toll.
Asos reported pre-tax profits of £18m for the six months to 28 February, down from £20.1m a year earlier.
However, the firm said it was confident of hitting its full-year profit target
Retail sales grew 17%, after currency fluctuations were removed, to £536m. Asos also said that sales in the UK were up 27%.
The firm said international sales were gaining momentum following the introduction of zonal pricing, allowing the company to price its products more competitively in different regions.
That helped boost overseas sales by 10% but reduced its profit margin.
Analysts currently expect Asos to report a full-year pre-tax profit of about £45m.
Asos is still recovering from a tumultuous 2014 which saw a warehouse fire at one of its largest distribution centres force it to suspend trading.
The combination of the strong pound and a large investment programme aimed at increasing its warehouse space have also hurt profit.
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."
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: "Sales have surprised to the upside, with accompanying outlook comments for in line full-year profits providing firm reassurance.
"Active customers have grown by 13% over the last year, with traffic from mobile devices now representing over 50% of all website traffic."