ASOS first-half profit falls on rising expansion costs

British online fashion retailer ASOS posted a 22 per cent fall in first half profit, reflecting its move to step-up the pace of infrastructure investment to meet future demand.

The firm, whose celebrity fans include Michelle Obama and singer Rita Ora, said on Wednesday it made a pretax profit of £20.1 million in the six months to the end of February, down from £25.7 million in the same period last year.

The outcome was in line with guidance issued on March 18th when ASOS warned that accelerated investment in warehousing in the UK and Germany to give the firm a sales capacity of £2.5 billion, as well as start-up costs in China, would hit annual profit.

ASOS said the extra costs would be disproportionately borne in the first half, resulting in a likely first half/second half pretax profit split of 30 per cent/70 per cent.

At the time it guided to a full-year pretax profit of about £65 million.

Shares in ASOS fell up to 22 per cent on the day of the profit warning, though they later recovered to close down 8 per cent.

They closed Tuesday at 5,154 pence, still up 54 per cent over the past year and valuing the business at £4.3 billion.

Half year revenue rose 34 per cent to £481.7 million, as the firm ended the period with 8.2 million active customers, up 36 per cent. Retail gross margin increased 60 basis points.

Reuters