An employee organises photographs of models at the ASOS headquarters in London...An employee organises photographs of models at the ASOS headquarters in London April 1, 2014. British online fashion retailer ASOS posted a 22 percent fall in first half profit, reflecting its move to step-up the pace of infrastructure investment to meet future demand. The firm said on Wednesday it made a pretax profit of 20.1 million pounds ($33.4 million) in the six months to Feb. 28, down from 25.7 million pounds in the same period last year. Picture taken April 1, 2014. REUTERS/Suzanne Plunkett (BRITAIN - Tags: BUSINESS FASHION)
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Online fashion retailer Asos enjoyed a Christmas season sales boost fuelled by its international business, although its profitability was muted because of lower prices.

The Aim-listed fashion website reported on Thursday that UK sales in the four months to December 31 rose 22 per cent to £206.2m, while the company was also buoyed by a 20 per cent jump in international trading to £240.7m.

This compares with just 5 per cent sales growth in the international business during the last six weeks of 2014 and total sales growth in the same period of 15 per cent.

“Autumn and winter in fashion is always tricky to predict and tricky to plan,” said Nick Beighton, who took over as chief executive of Asos from founder Nick Robertson last year after a series of profit warnings in 2014. “This year has probably been one of the most difficult for fashion retailers.”

Asos said its retail gross margin was down by 40 basis points as it cut prices.

Asos has plans to invest £80m in technology and distribution by the end of the financial year. It reported mobile traffic increased 85 per cent over the Black Friday discounting weekend with a 120 per cent increase in usage of the mobile app.

According to a survey of 3,000 UK consumers by Jefferies, the research house, Asos — which stands for “as seen on screen” — has a website that ranks ahead of rivals such as Boohoo, H&M and Next for content and ease of use.

But, as traditional bricks-and-mortar retailers improve their online offerings, analysts say Asos’s position as a leader in the digital market could be under threat.

“Declining margins, a result of price investment, represents work to do for the retailer in 2016,” said Andrew Hall, a consultant at Conlumino. “Likewise, a malaise in [rest of the world] growth (2 per cent) reflects a blinkered investment strategy which focuses on the UK, Europe and US.”

Asos’s international sales growth was predominantly driven by strength in the US and EU, which reported growth of 42 per cent and 29 per cent respectively compared with 2 per cent in other countries where sales contributed almost £80m, Mr Beighton said.

According to Mr Beighton, slow growth outside the US and Europe was caused by currency headwinds in Australia. “There’s only so far we can go to soften that blow for our customers,” he said.

He added that the US, UK and Europe were the focus of Asos’s expansion plans.

Stripping out exchange rate fluctuations, sales outside the UK, US and EU grew 13 per cent.

Mr Beighton said he would double sales at the fashion website to £2.5bn by 2020 and invest in distribution. Last month construction began at Asos’s new 800,000 square foot “EuroHub” distribution centre near Berlin, which is due to become operational in 2018.

Asos is the second online-only retailer to post results for winter trading after Boohoo on Tuesday said sales rose 49 per cent to £73.7m.

This article has been amended since initial publication to clarify sales figures

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