• Asos saw pre-tax profits grow 10% to GBP29.9m (US$42.4m) in H1.
  • Group revenues climbed 27% to GBP1.16bn.
  • The retailer's share price was down, however, as investment has failed to deliver meaningful margin benefits.
Asos said total orders placed rose by 28% year-on-year

Asos said total orders placed rose by 28% year-on-year

UK online fashion retailer Asos saw its share price drop this morning (11 April) despite booking a 10% increase in first-half earnings and a near 30% jump in revenues.

The AIM-listed firm saw pre-tax profits reach GBP29.9m (US$42.4m) in the six months to 29 February, while group revenues climbed 27% to GBP1.16bn. Retail sales were also up 27%, to GBP1.13bn.

The group reported UK retail sales growth of 22% to GBP414.5m and international sales growth of 31% to GBP716.8m. Retail gross margin improved by 100 basis points to 48%.

Asos said total orders placed rose by 28% year-on-year to 29.9m, while first-half site visits exceeded 1bn for the first time.

"These results show strong trading at the same time as we are making substantial investment in our future," said CEO Nick Beighton. "Alongside our investment in our people and our technology, we are accelerating investment in our distribution and logistics, laying the foundation for GBP4bn of net sales, a further step in building Asos into the world's number one destination for fashion loving 20-somethings."

Asos is increasing its capex guidance to between GBP230m and GBP250m in both this financial year and the next (2019), having invested just over GBP95m in the first half.

The news is thought to have sent the company's share price down 8.8% to 6,410 pence in early morning trading. The rapid growth of the retailer has meant it needs to continually invest, but analysts have suggested this isn't delivering any meaningful margin benefits.

Asos made no change to either sales or EBIT guidance for both the financial year and the medium term.

Sofie Willmott, senior retail analyst at GlobalData, puts the company's growth down to its evolving product range, a best-in-class online shopping experience and range exclusivity.

"As Asos invests to create the infrastructure in order to support GBP4bn of net sales there is no sign of the online pureplay slowing down and full-year sales growth is expected to come through at +25-30%.

"As well as developing localised warehouses in Europe and the US to further propel international sales, which now account for 63.4% of retail revenue, technology improvements including embedding AI in various areas of the business, remain a key area of focus. The ability to invest and continue to improve the proposition to meet rapidly rising consumer demands will allow Asos to enhance the customer experience and in turn brand perception, driving further enviable sales growth."