Online retailer ASOS drops 11% on warning

ASOS, the online fashion retailer popular among 20-somethings, has warned its full-year sales growth will be at the "lower end" of expectations.
Its shares fell as much as 11% in early trading in London as the company also missed its sales forecast.
Although total retail sales rose 22% to €802.7m in the four months to 30 June, it was below analysts' expectations of 25.8%, as well as the 27% it reported in the first half.ASOS expects full-year sales growth to be "towards the lower end" of a 25% to 30% range.Despite missing the forecast, ASOS and rival Boohoo have benefited as consumers move away from traditional high street retailers in favour of shopping online.E-commerce now represents 18% of UK retail sales, with struggling brick-and-mortar brands such as House of Fraser cutting jobs and closing stores.With a market valuation of €5.47bn - exceeding that of Marks & Spencer - ASOS is spending millions on its technology and logistics to take on Amazon.It will open a new warehouse in Atlanta, Georgia, and the second phase of a distribution centre in Berlin later this year.
Chief executive Nick Beighton said: "As well as managing 22% growth we're also managing demand around key infrastructure programmes."There's certain quarters where you go for growth and certain quarters where you manage demand around your infrastructure periods - the last four months has been categorised by that."UK retail sales rose 23% to €288m, sales in the EU soared 31% to €257.4m, and US sales increased 15% to €108.1m, the company said.ASOS expects its profit before tax to be in line with consensus forecasts for the year.Despite the company's stock falling, analysts were still enthusiastic about ASOS.
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"In our view, ASOS remains a structural winner given the shift online together with its global aspirations," Greg Lawless, research analyst at Shore Capital, said in a note to investors. He recommends investors buy the stock.And Sofie Willmott, senior retail analyst at GlobalData, said: "With high investment planned to support growth across the board, ASOS's international results are not a cause for concern."
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