Fashion website ASOS has warned that profits are likely to be below previous expectations, hit by the strength of the pound impacting international sales and increased levels of promotional activity.

Shares in the fashion company fell 40% following the announcement, triggering similar share falls at Boohoo, Ocado and Sports Direct.

In a statement, ASOS said that retail sales were up 25% year-on-year for the three months to May 31st, although international sales showed slower growth of 17%.  Nick Robertson, CEO, said that the resultant higher mix of UK and European sales, with lower retail margins and increased levels of promotional activity, meant that it was changing its profit expectations to 4.5% growth, down from the 6.5% previously expected.

Mr Robertson, commented: “Whilst our profit performance for this financial year is not what we had hoped for due to an unusual combination of factors, our accelerated investment in technology and infrastructure to support our £2.5bn sales ambition is progressing and capex remains within guided levels. All customer metrics - active customers, new customers, order frequency and units per basket - are positive and we are totally focussed on rolling out the ASOS business model globally as the world's leading online fashion destination for 20-somethings."