In the fiscal year ending August 31, 2014, UK online fashion retailer – ASOS reported a 14 percent year-on-year drop in pre-tax profits to £47 million.
ASOS said profits were impacted from the huge fire at its Barnsley depot in North England, launching services in China, optional investments and the impact of a strong pound.
Retail sales reached £955 million in the reporting period, a surge of 27 percent from the previous fiscal year.
The surge in retail sales were helped by UK retail sales zooming 35 percent from a year earlier and global sales rising slower at 22 percent.
However, retail gross margin fell 210 bps from 50.8 percent in the previous fiscal year to 48.7 percent in the fiscal year under review, from the impact of a price cut by ASOS.
According to analysts, margins were hit as overseas customers were not willing to fork out higher prices, which ASOS had implemented after strengthening of the pound, leading the retailer to then cut prices.
Earlier, the fashion retailer has said it would reduce prices to reverse the slowdown in overseas markets sales growth.
ASOS now expects profits to be similar in the fiscal year ending August 31, 2015, as it continues to make investments in international pricing, warehousing and technology infrastructure.
The fashion retailer also forecasts sales growth to slow down by 15-20 percent in the new fiscal year from the year ending August 2014.
The UK retailer is however optimistic that it can touch its target of £2.5 billion in sales by 2020.
"We are still an investment story in an opportunity that is ahead of us. Unfortunately, the year we just completed, was the most challenging in the last 15 years,” CEO Nick Robertson said.
"We are in a period of major investment that comes at a short term cost, but the medium-term benefits will be significant," he added.
ASOS also informed that it was promoting its CFO Nick Beighton to COO with immediate effect. (AR)
