Asos has reported a nosedive in interim profits, which boss Nick Beighton attributed to “major capex” costs that “inevitably involved significant disruption and transition costs”.
The fashion etailer posted an 87% fall in pre-tax profit year on year to £4m in the six months to February 28.
Although the retailer posted a 14% uplift in group revenue to £1.3bn, up 12% on a constant currency basis, Beighton said the retailer is “capable of a lot more”.
Despite its profits decline and subdued sales growth, Beighton said Asos’ full-year guidance remains unchanged.
“We have identified a number of things we can do better and are taking action accordingly,” he said, and added that the retailer is “confident of an improved performance in the second half”.
Asos’ UK sales increased 16% to £481.5m, while its international sales rose 12% to £799.8m.
Gross margin fell 60 basis points during the period to 48.7%.
Although the etailer’s number of active customers increased 16% and order frequency rose 4%, the average order value dipped 2%.
The retailer also said that its operations at its US hub, which had constrained growth, have now stabilised.
“We are nearing the end of a major capex programme,” said Beighton.
“Whilst this has inevitably involved significant disruption and transition costs, the global capability it now provides us gives us increased confidence in our ability to continue to capture market share whilst restoring profitability and accelerating free cashflow generation.
“Global online fashion is a growing, £220bn-plus market. We now have the tech platform, the infrastructure, a constant conversation with our growing customer base who love our own great product and the constantly evolving edit of brands we present to them.
“We believe that ultimately there will only be a handful of companies with truly global scale in this market. We are determined that Asos will be one of them”
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Asos profits plunge as international costs bite