Asos hit by 87% profit fall

Online clothing retailer, Asos has announced an 87% fall in pre-tax profits down to £4m for the six months leading up to 28 February, against results for the same period during the 2018 financial year.

The retailer blamed its profit plunge on a difficult year caused by “heavy discounting” and website traffic issues. Asos also said that changes to its marketing strategy had meant a drop in its search engine rankings and website visits in general.

Despite the fall, the online retailer said it had managed to stabilise sales, which rose by 14% to £1.3bn for the same period. Shares in the retailer rose by 3% following the interim results statement.

Asos CEO, Nick Beighton, said: “We grew sales by 14% despite a more competitive market. Asos is capable of a lot more. We have identified a number of things we can do better and are taking action accordingly. We are confident of an improved performance in the second half and are not changing our guidance for the year.

“We are nearing the end of a major capex programme. 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 cash flow generation.”

He added: “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.”