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Online fashion retailer ASOS (LON:ASC) announced a 14% increase in group revenues for the six months ended 28th February. Gross profits rose by 12%, but there was a 50 basis point drop in gross margins driven by heavy discounting in the first quarter. However, pre-tax profits fell by 87% due to temporary transition costs.
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.
“Global online fashion is a growing, £220bn+ 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“.
Shares in ASOS climbed 7.90% to 3,399p (as of 14:40 BST).