Asos warns on profit
Online fashion retailer Asos has warned on profits after it was impacted by a strong pound, increased promotional activity and a strong rate of growth in lower margin UK products in its third quarter.
In the three months to 31 May 2014, retail sales climbed by 25% overall with UK sales up 43%. However, sterling’s continued strengthening resulted in a slowdown in international sales growth to 17%.
During the quarter, international retail sales made up 62% of the total compared to 67% in the same period last year.
The retailer said the higher mix of UK and European sales, with lower retail margins, together with increased levels of promotional activity, led to it reducing its EBIT margin guidance to c.4.5% from c.6.5% for the current financial year.
Asos chief executive Nick Robinson said: "Whilst our profit performance for this financial year is not what we had hoped for due to an unusual combination of factors, our accelerated investment in technology and infrastructure to support our £2.5 billion sales ambition is progressing and capital expenditure remains within guided levels."
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