ASOS says growth story still intact after profit falls

* H1 pretax profit 20.1 mln stg vs 25.7 mln stg

* H1 retail sales 472.3 mln stg, up 34 pct

* Says on track to hit 1 bln stg in 2013-14 year

* Comfortable with year profit forecast of 65 mln stg

* Shares down 0.2 pct, up 54 pct over last year (Recasts, adds detail, CEO, analyst comment)

By James Davey

LONDON, April 2 (Reuters) - British online fashion retailer ASOS (Other OTC: ASOMF - news) said on Wednesday its long-term growth ambitions were as strong as ever, after it posted a 22 percent fall in first half profit that reflected a step-up in its investment programme.

ASOS, whose fast-changing fashions are a global hit with internet-savvy twentysomethings, been the great success story of British retailing since it floated at just 20 pence in 2001, compared with the 1005 GMT price of 5,176 pence, a rise of 0.4 percent on the day.

"Fundamentally the story's still as strong as ever, the opportunity's probably stronger than ever," founder and Chief Executive Nick Robertson told Reuters.

"We are on line to hit our 1 billion pounds ($1.7 billion) of sales (target) this year (2013-14), which means we've got to grow at 30 odd percent for the second half. I'm comfortable with that."

Shares in ASOS, whose celebrity fans include United States First Lady Michelle Obama and British singer Rita Ora, fell 8 percent on March 18 when the firm reported that sales growth slowed in February.

It had also warned that faster investment in warehousing in the UK and Germany to give the firm a sales capacity of 2.5 billion pounds, as well as start-up costs in China, would hit annual profit.

"We had to report the two-month period and it did show a softening of sales in February," said Robertson, who owns 9.3 percent of ASOS's equity.

"People then suddenly take that as the new run rate. Well, categorically that's not the case."

ASOS, whose shares are still up 54 percent over the last year, has a current market capitalisation of 4.3 billion pounds - more than four times the value of Britain's 200 year-old Debenhams (Other OTC: DBHSY - news) chain.

"Take a 12-year view of the shares as opposed to a two month view of the shares," said the CEO, the great grandson of tailor Austin Reed.

But its sky-high valuation has given it little margin for error. ASOS trades at 71.1 times analysts' 2013-14 earnings forecasts, according to Reuters data.

"The company is investing for long term growth, which is the right thing to do ... Our view remains that the cost of that growth is not fully priced in," said analysts at Liberum.

NOT ABOUT THE SHORT TERM

In line with guidance issued last month, ASOS made a pretax profit of 20.1 million pounds in the six months to Feb. 28, down from 25.7 million pounds in the same period last year.

It said the extra investment costs would be disproportionately borne in the first half, resulting in a likely first half/second half pretax profit split of 30 percent/70 percent. It guided to a full-year pretax profit of about 65 million pounds.

"This increased pace of investment has reduced our profitability in the period, but will deliver significantly increased capacity as well as efficiencies in the longer term," said Robertson. "ASOS is not and has never been about the short term."

Half year retail sales rose 34 percent to 472.3 million pounds, as the firm ended the period with 8.2 million active customers, up 36 percent. Retail gross margin increased 60 basis points.

Robertson declined to say when ASOS would hit 2.5 billion pounds of sales.

However, he did say: "Analysts have got us growing between 25 percent and 30 percent per year, so if you start with 1 billion pounds this year (2013-2014), you can do the maths."

($1 = 0.6011 British Pounds) (Reporting by James Davey; editing by Kate Holton, John Stonestreet)