ASOS shares tumble as 'challenging' markets hit sales

Shares in ASOS have fallen sharply after it reported "challenging" conditions in France and Germany and said sales in the US had been hit by teething problems at a new warehouse.

The online fashion retailer said overall revenues in the three months to 28 February - stripping out currency movements - were up by 11% to £658.5m compared to last year, with the UK up 14%.

But the fast-expanding company saw the pace of growth in the EU slow to 8% while in the US, sales fell by 3%.

Chief executive Nick Beighton said France and Germany, the retailer's two largest markets "continue to be challenging" while the US performance fell short of plans.

He said: "As our Atlanta warehouse went fully online, demand far exceeded our expectations.

"Whilst very encouraging for the longer term, this caused a significant short-term despatch back log which we have now cleared."

Mr Beighton said ASOS was now increasing its investment in price and marketing, particularly in France and Germany, and that it was seeing an improved US performance.

He said he remained confident that the group would meet its profit guidance for the full year to the end of August.

The company is due to publish half-year results next month.

ASOS had issued a profit warning in December as it reported a "significant deterioration" in sales growth.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "The market had come to expect 25% sales growth a year from ASOS, but the company only expects 15% this financial year.

"The slowing growth seems to be a result of weaker consumer confidence, while increased promotional activity suggests the competition is heating up too.

"There's now a lot of pressure on the next six months to bring ASOS back up to what is a tepid growth rate by its own high standards."

Shares fell as much as 11% following the latest update and were 7.3% down at the close.