ASOS shares drop despite 27% half-year sales growth
The online retailer says it's investing in new infrastructure to meet rising demand
ASOS shares fell by 11 per cent on Wednesday morning despite seeing a healthy boost to half-year profits.
The online fashion retailer saw sales grow by 27 per cent in the six months ending February, with international sales growing by 31 per cent and UK sales up by 22 per cent.
The UK based company, notable for its appeal to young online shoppers, made a total of £1.15bn in the six month period, with UK retail sales accounting for £414m and sales from the rest of the world raking in £716.8m.
Analyst Nicholas Hyett said the unusual sight of company shares falling after delivering strong growth was down to the firm’s inability to keep costs down.
“That the rapid growth isn’t delivering any meaningful margin benefits only adds to the frustration,” he said.
Mr Hyett added: “The ramp up of activity in Europe and creation of US infrastructure were always going to be capital intensive and, once complete, investment demands should fall back. Once that’s out of the way increased sales volumes should see margins heading in the right direction – we hope.”
ASOS chief executive Nick Beighton has committed to investing more than £250m in distribution and infrastructure to meet growing demand.
“These results show strong trading at the same time as we are making substantial investment in our future,” he said.
“Our customer engagement is going from strength to strength and we’ve achieved more than a billion site visits for the first time”.