ASOS first-half profit falls on investment, lower prices

[LONDON] 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.

The company, which issued three profit warnings last year, said on Wednesday it made a pretax profit of 18 million pounds (S$36.5 million) in the six months to Feb 28.

That compared to analysts' average forecast of 16.3 million pounds and 20.1 million pounds made in the same period in its previous financial year.

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.

"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," said chief executive Nick Robertson.

ASOS's first-half retail sales, reported last month, rose 17 per cent on a constant currency basis to 536.4 million pounds, 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 45 million pounds, according to Reuters data, down from 47 million pounds in 2013-2014.

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

REUTERS