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Asos shares soar 18% despite fall in profits | |
(about 3 hours later) | |
Annual profits at Asos have fallen by 14% after the online retailer was hit by the strength of sterling and a major warehouse fire. | Annual profits at Asos have fallen by 14% after the online retailer was hit by the strength of sterling and a major warehouse fire. |
Pre-tax profits fell to £46.9m in the year to 31 August despite Asos increasing sales by 27% to £955.3m. | Pre-tax profits fell to £46.9m in the year to 31 August despite Asos increasing sales by 27% to £955.3m. |
However, overseas sales have slowed due to the strong pound forcing Asos into a series of promotions. | However, overseas sales have slowed due to the strong pound forcing Asos into a series of promotions. |
But Asos shares rose 18% as investors bet that a difficult year that included three profit warnings was over. | |
Investment plans | |
Chief executive Nick Robertson said in a statement: "Despite all that happened this year, we still delivered 27% growth in sales, with the UK a standout performance at 35% growth. | Chief executive Nick Robertson said in a statement: "Despite all that happened this year, we still delivered 27% growth in sales, with the UK a standout performance at 35% growth. |
"We are in a period of major investment that comes at a short term cost, but the medium-term benefits will be significant. | "We are in a period of major investment that comes at a short term cost, but the medium-term benefits will be significant. |
"Asos has always been about the longer journey to a very big prize: to be the world's leading fashion destination for 20-somethings, and we are firmly focused on our next staging post of £2.5bn sales." | "Asos has always been about the longer journey to a very big prize: to be the world's leading fashion destination for 20-somethings, and we are firmly focused on our next staging post of £2.5bn sales." |
Also on Tuesday, the firm announced that it had promoted chief financial officer Nick Beighton to the chief operating officer role. | Also on Tuesday, the firm announced that it had promoted chief financial officer Nick Beighton to the chief operating officer role. |
In June, Asos briefly suspended trading after a fire at its main warehouse in Barnsley. The company has also been investing heavily in China. | |
Confidence 'mixed' | |
Investors greeted the annual results by pushing Asos shares up sharply. "Management has now bought itself some time to tackle the issues," said analysts at N+1 Singer in a note. | |
But Anusha Couttigane, consultant at retail analysts Conlumino, said that challenges remain. | |
"Nick Robertson is keen to point out the long term ambitions of the retailer. Yet the way things stand, it is clear that some investors are growing impatient. | |
"With Asos' share value halving over the course of the year, it is evident that confidence in the retailer's ability to generate a fast turnaround is mixed," she said. |
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