Asos (ASC) may have delivered double-digit sales growth in the first six months of the year, but pre-tax profit slumped 10 per cent to £18m because the online fashion retailer slashed prices and pumped money into its warehousing capacity. Together with higher rate of returns in the UK and Germany, that left the retail gross margin 270 basis points lower at 46.8 per cent.
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Chief executive Nick Robertson explained the reason for the price cuts: international sales started to decline last year as sterling strengthened. Therefore, it was necessary for Asos to rebase pricing to boost sales and attract customers. As a result, prices fell in Australia, New Zealand and the eurozone.