Asos reported a 22% fall in pre-tax profits to £20.1m in the six months to February 28 after investing in the business. Retail Week takes a look at the reaction from the City.

“The Asos results are far from disappointing; especially for the UK. Although Europe and the US performed well, the Rest of World let the side down, even if underlining demand appears strong. Realistically you can’t expect stratospheric growth to be reported in all countries operated every time. There might well be some bumps in the road, and while the juggernaut that is Asos might well be slowing, it remains on course to deliver on, if not exceed, expectations.” - Malcolm Pinkerton, Planet Retail

“We are concerned that the ranges in womenswear have been expanded beyond the levels management can adequately control. Hence, we 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.” - Freddie George, Cantor

“While there is a bit more detail in the interim statement, and we expect management to be back on the front foot at the results presentation, we have not spotted any new headlines, relative to the points made at the Q2 update. In the outlook statement, management has reiterated its confidence in the long term growth prospects, but no comment on current trade. Given the headwinds seen in H1, Asos may struggle to achieve the 27% H2 growth required to get to its £1bn sales target. Alternatively, the cost of achieving this growth may be higher. Management has already guided slightly lower on the FY gross margin (+40bp from up to +60bp). Higher delivery and marketing costs as a percentage of sales in H1 are expected to come down in H2. This needs to happen in order to meet guidance, but to reach the £1bn of sales may put upward pressure on marketing in particular.” - Sanjay Vidyarthi, Liberum

“The key takeaways from the Q2 included 1) strong continuing growth in some overseas regions and also the UK, albeit slightly softer than hoped, confirming the strength of the model, and 2) as Asos internationalises overseas FX fluctuations become increasingly relevant meaning the recent appreciation of Sterling has seen sales slow in several markets. Nevertheless the exit rate is still c30% growth and these FX headwinds should moderate at some point in time. 3) a wide range of additional investment to enhance the international appeal and reach of ASOS, and 4) management’s confidence in the ability to reach £2.5bn revenue (the next staging post).” – Matthew McEachran, N+1 Singer

“As a year of investment/consolidation, we see little opportunity for earnings outperformance this year, although Asos is putting in place significant distribution capability to support a sales base of £2.5bn.” – John Stevenson, Peel Hunt