Asos Reports Its First Profit Decline In Years As It Ramps Up Expansion Plans

Fashion phenomenon Asos has reported a decline in profit as it sets aside more money to invest in a £2.5 billion growth plan.

The retailer said profit in the six months to February 28 fell 22% to £20.1 million after it increased money set aside for investment this year to £68 million. Revenue in the period increased 34% to £481.7 million.

The group warned of the revised plan last month that will "double capacity" to £2.5 billion. It prompted a decline in its share price by almost a fifth on the day.

The share price remains depressed but the short-term profit implications the strategy have been shrugged off by some in the City, despite some additional concerns that sales in key regions had slowed.

Barclays this week raised its forecast for the Asos share price from £60 to £80 with a potential medium-term target of £100. The shares closed yesterday at £51.54.

Asos said it has accelerated its infrastructure investment in warehousing and technology to create additional capacity.

Asos said: 'Our £68 million investment during the current year will more than double the sales capacity with greatly enhanced efficiencies at our UK warehouse, a new Eurohub in Berlin, an expanded facility in Ohio in the US and a new warehouse in Shanghai.'