Apr 4, 2017
Asos shares slide as margins squeezed
Shares in Asos, dropped 7.4 per cent on Tuesday, their sharpest fall in five months, after the UK online fashion retailer said "Significant" price cuts had squeezed profit margins. Asos left profit guidance unchanged as it said its gross margin had fallen 40 basis points compared with a year earlier to 47 per cent, due to lower prices for non-UK customers, which account for three-fifths of sales. In the UK, Asos posted "Solid sales growth" of 18 per cent compared with the first half in 2016. Shares in the Aim-listed group pared back some of their losses to trade 3.7 per cent lower at £57.53 by lunchtime in London, but are up 74 per cent over the past year. Asos said pre-tax profits from continuing operations had risen 14 per cent compared with a year earlier, to £27.3m, as the number of customers rose 29 per cent in the six months to 14m. George Mensah, analyst at Shore Capital, said in a note to clients that Asos was "Well positioned to take market share in apparel online, which as an addressable market should continue to growth over the long-term as more consumers transact online".
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