Online fashion retailer Asos has posted a 22 percent drop in profits as it boosts spending on international expansion, particularly into China.
The company said pre-tax profit for the six months to February 28 hit £20.1 million ($33.4 million) down from the £25.7m at the same time last year, but retail sales saw a 34 percent rise.
The drop in profit was expected. Shares in the Aim-listed company stumbled last month after it issued a profit warning. Wednesday morning, Asos shares were flat, having rallied 59 percent in the last 12 months.
"These results are all about the investment we are now putting in. We're putting in the infrastructure now both in technology and in warehousing to double the size of business over the next few years, and that's cost us," Nick Robertson, CEO of Asos, told CNBC in a TV interview.
Asos has accelerated its infrastructure investments as it eyes up sales of £2.5 billion per year. The British company will invest £68 million in upgrading its depot in Barnsley, North England, building a new "Eurohub" in Berlin, expanding a facility in Ohio and opening a new warehouse in Shanghai.
Last year Asos launched a dedicated Chinese website in an attempt to tap the fashion-hungry consumers in the world's second-largest economy and has done the same in markets such as Russia and Germany.
Robertson said the company's operations are still small in China but is there for the long run.
"We are still a start-up in China. The business there is much much smaller than the rest of it. So we are on a long journey there…we expect to be there for many years to come," he said.