ASOS accelerates investment as sales keep on rising

LONDON, March 18 (Reuters) - British online fashion retailer ASOS (Other OTC: ASOMF - news) said it would increase its investment in warehousing and IT this year as it matches up to increasing demand that helped sales rise 26 percent in its second quarter.

ASOS, whose fast-changing fashions are a hit with internet-savvy twentysomethings, attracting fans such as singer Rita Ora, said on Tuesday retail sales had jumped to 136 million pounds ($226.4million) for the two months to Feb 28, ahead of 108 million a year ago.

That pushed retail sales up 34 percent in total for the first six months of its fiscal year. It said it was confident of hitting 1 billion pounds in sales this year.

Founded in 2000 by chief executive Nick Robertson, ASOS has been a success story in British retailing. Its shares have almost doubled in the last year, giving it a market value of 5.3 billion pounds, only 2.3 billion pounds less than 130 year-old Marks & Spencer (Other OTC: MAKSF - news) , Britain's biggest clothing retailer.

The group upped its guidance for capital expenditure this year from 55 million pounds to at least 68 million pounds as it steps up investment in warehousing in the UK and Germany and in IT in order to speed up deliveries and cut costs.

The investment will increase the firm's annual sales capacity to 2.5 billion pounds, ASOS said, over 1 billion pounds higher than previously guided.

The company said that the increased spend, together with the investment in its China start-up, would reduce its operating margin for the year to Aug. 31 to 6.5 percent, with pretax profit likely to be heavily weighted to the second half.