ASOS profits plunge by 22%
Online fashion firm ASOS insisted it was keeping its sights on the long-term picture after expansion costs sent half-year profits plunging by 22%.
The group saw pre-tax profits drop to £20.1 million in the six months to February 28 from £25.7 million a year earlier despite notching up a 34% hike in retail sales to £481.7 million.
Chief executive Nick Robertson said the group has "never been about the short-term" as he put faith in a ramped-up £68 million investment plan this financial year to double annual sales capacity to £2.5 billion.
ASOS, which stands for As Seen On Screen, warned last month that costs of new warehousing in the UK and Germany as well as start-up expenses in China would hit profits.
More than a fifth of its stock market value was wiped off at one stage after the warning in March and as its second quarter sales growth failed to match forecasts.
But Mr Robertson said: " This increased pace of investment has reduced our profitability in the period, but will deliver significantly increased capacity as well as efficiencies in the longer term.
"The scale of the global opportunity remains as exciting as ever and we are investing for the many opportunities ahead."
ASOS launched in China last October and the venture cost the group £3.7 million in the first half, with overall spend in the year to August 31 expected to total around £9 million.
Its rapid expansion in recent years has made it one of the London market's best performing stocks, but last month's disappointing update prompted many to sell shares and lock in gains.
Shares edged around 1% higher today as the interim figures came in as expected.
ASOS said UK retail sales rose 32% to £182 million, while international revenues lifted 35% to £290 million.
Andrew Wade, retail analyst at Numis Securities, said he remained "confident in the ASOS proposition" despite the profit impact.
But Freddie George, retail analyst at Cantor Fitzgerald, flagged up concerns over the group's womenswear offering, which he said might have been expanded " beyond the levels management can adequately control".
He added: "W e believe the company has seen significantly higher levels of markdown activity in womenswear and higher returns over the last two months.
"As with 'bricks and mortar' retailers having a poor fashion season, ASOS will now have to reassess their womenswear strategy and reduce the number of womenswear lines, which is likely to impact sales over the spring/summer 2014 and autumn/winter 2014/15 season."
ASOS has nine local language websites in the UK, US, France, Germany, Spain, Italy, Australia, Russia and China.
The brand - targeted at ''fashion forward twenty somethings'' - attracts 71 million visits per month to its websites while it had 8.2 million active customers in the last year, of which 3.2 million were in the UK.