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Asos half-year profits fall by 10 per cent; time to sell’?

Kit Klarenberg
Written By:
Kit Klarenberg

The half-year profits of Asos have fallen by 10 per cent, it has been announced – despite a record Christmas trading period, which saw sales increase by 14 per cent.

The online retailer remained buoyant despite the bad news, with spokespeople claiming the ‘slight’ reduction was attributable to a price-cutting drive. While sales for the six months ending 28 February grew from £481m to £550m, pre-tax profits fell from £20m to £18m.

The retailer’s UK operations performed strongly, climbing by 27 per cent, but the firm’s international operations struggled in the same period due to a strong pound pushing up prices for overseas customers.

However, the news did not provoke hostile reaction from investors, and the firm’s share price ended 2.7 per cent higher (at £37.28) than the day previously.

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

However, Freddie George of Cantor Fitzgerald, said “question marks” continued to hover over Asos. “Last year, Asos issued three profit warnings in six months, so forecasts for 2015 and 2016 have broadly as a result,” George noted. “The company will have to continue to discount and offer free delivery charges and returns to maintain sales momentum.”

“We are concerned about the valuation, and are retaining our sell recommendation.”