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Asos profit slides 87%

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Christian Fernsby |
ASOS   Pre-tax profits dropped to £4m in the six months to February 28

Asos reported on Wednesday a nearly 90 per cent tumble in half-year earnings.

Pre-tax profits dropped to £4m in the six months to February 28 from £29.9m in the same period the previous year, the group said.

The main problem was the German and French markets. EU sales grew 10 per cent, behind the company’s forecast, and the need to discount pushed margins down. “We are now picking up the pace of our marketing activity and have lowered pricing in some of our key European territories,” the company said in a statement.

Trading was also behind plan in the US after the botched opening of a warehouse there. Staffing at the site in Atlanta has since been doubled to cope with the demand, and Asos said performance should improve in the second half. 

Overall, sales grew by 14 per cent but gross margins were down 0.6 percentage points and the company swung from net cash a year ago to net debt of £38m. Sales growth in third-party brands, which carry lower margins, was well ahead of growth in Asos’s own-label creations. 

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