British online fashion retailer ASOS warned on Thursday it would be less profitable this year due to higher promotional activity, the strong rate of growth in low-margin British products and the hit from the strong pound.
Shares in ASOS, whose fast-changing fashions are a global hit with internet-savvy 20-somethings, crashed in March when the group announced plans to invest more rapidly in infrastructure to meet future demand at the expense of short-term profits.
In early-morning trade in London, shares in the company were down more than 35 percent at 2,928 pence. They ended the day down more than 31 percent at 2,961 pence.
Prior to Thursday, its shares had doubled in the previous 12 months as the group, which was founded in 2000, grew rapidly.
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In an unexpected trading update the group said on Thursday it now expected its operating margin for the current financial year to come in at around 4.5 percent from around 6.5 percent, due to strong sales in Britain, where its margins are generally lower.
Retail sales in Britain in the three months to the end of May were up 43 percent. International sales, which tend to sell at a higher margin, were up 17 percent, but these were hit by the strong pound.
"Whilst our profit performance for this financial year is not what we had hoped for due to an unusual combination of factors, our accelerated investment in technology and infrastructure to support our 2.5 billion pounds sales ambition is progressing and capex remains within guided levels," Chief Executive Nick Robertson said.
ASOS has been the great success story of British retailing since it floated at just 20 pence in 2001.
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