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Asos hoping price cuts can rejuvenate international sales

Asos.com chief executive Nick Robertson has vowed to cut prices overseas to turn around the etailer’s “subdued” international sales.

Non-UK sales rose 6% to £141m in its fourth quarter to August 31, contributing to total growth of 15% to £240m. International sales were up 17% in the previous quarter.

Asos will cut prices across overseas territories, focusing on key markets including Australia and Russia, where prices are up to 30% higher than in the UK.

“We need to reset our expectations,” said Robertson. “We have to take on that pain to make sure we appeal to international customers; we don’t want to continue to see this international slump.”

The company will introduce a zonal pricing project in October.

Asos this week issued its third profit warning in seven months, saying pre-tax profits in the year to August 2015 are likely to be in line with this year’s forecast, which was revised downwards from £62m to £45m.

UK sales were strong in the three months to the end of August, up 33% year on year to £98m, despite losses of between £25m and £30m due to the fire at Asos’s Barnsley distribution centre in June.

Retail gross margins were down by as much as 640 basis points year on year as a result of sales lost due to the fire, as well as increased promotional activity overseas to boost the slowing sales.

Robertson dismissed last month’s speculation that a US company such as Amazon or eBay may bid for a stake in Asos, saying the rumours had “no substance whatsoever”.

He added that the company was still focused on its “next staging post” of £2.5bn of sales.

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