Asos Growth Slows, With Investments Expected to Cut Profit Margins in 2014

Weak currencies in Australia and Russia have contributed to the slowdown, the company says.
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Eliza Brooke
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Weak currencies in Australia and Russia have contributed to the slowdown, the company says.
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Asos shares took a hit Tuesday morning -- a 22 percent hit -- with the news that sales growth has slowed slightly for the online retailer.

According to a trading statement released Tuesday, Asos's sales revenue was up 26 percent in January and February which, though an impressive figure in and of itself, was less than the 38 percent growth the company witnessed in the four months prior, and less than the 33 percent rise that analysts expected. According to Asos CEO Nick Robertson, that can at least partially be chalked up to sales slowing in Australia and Russia due to the weakness of the countries' currencies.

Meanwhile, an investment in IT and warehousing in the UK and Germany, along with an investment in its China start-up, will cut profit margins in the upcoming year, Robertson says. However, the £68 million capital expenditure is expected to pay off over time in the form of a vastly increased sales capacity.

Despite Asos's long-term view, the news caused shares to sink roughly 22 percent, which Bloomberg notes is the largest single day drop since 2008.

Asos now has 8.2 million active customers, the company reports.