Asos says online customers will not face price hikes as seen elsewhere

Posting a 59 per cent surge in half-year profits, the group yesterday pledged not to hike the prices of its own-brand products which represent about half of its total offering.

It also hopes that a new feature allowing smaller, independent designers to sell through its website will help it build on a strong run of sales.

The company said the "Asos Marketplace" initiative - allowing small boutiques to sell their fashion products to the web store's customers - should boost traffic to its site and drive further sales when it is launched before Christmas.

Asos, whose name stands for As Seen On Screen, targets net-savvy 16 to 34-year-olds looking to emulate the designer looks of celebrities like Kate Moss, Sienna Miller and Alexa Chung but at a fraction of the price. It has been one of the biggest internet retailing success stories in recent years.

Soaring raw material costs, in particular the price of cotton, have prompted a number of big names to warn of product price rises in the months ahead. Last week, Next - Britain's number two fashion retailer - warned its shoppers face near double-digit price rises for clothes next year.

Nick Robertson, chief executive of Asos, said: "Because we're going back to our suppliers and increasing our orders by 50 per cent, we can negotiate hard on that basis."

He gave the assurances on pricing as the group said it was on track to meet full-year City forecasts for pre-tax profit of about 28 million, after making 7m in the six months to 30 September, up from 4.4m a year earlier.

Shares in the firm have more than doubled over the past six months, fuelled by buoyant trading and trader speculation that it could attract a bid from companies as diverse as Danish shareholder Bestseller, US web giant Amazon and UK retailers Marks & Spencer and Tesco.

Nick Bubb, a retail analyst at Arden Partners, said: "The issue about Asos is what PE (price earnings ratio] is justified by circa 30 per cent earnings growth.

"Although the shares have come off recently, we think a PE of nearly 52 times is way too high."

Andrew Wade, an analyst at brokerage Numis Securities, said Asos was on the way to becoming a global fashion destination and raised his full-year profit guidance to almost 27m from just below 26m.

First-half revenue increased 45 per cent to 139.7m, with UK retail sales up 26 per cent and international sales jumping 120 per cent.Retail gross margin rose 2.8 percentage points to 47.4 per cent.

Highlighting aviator jackets, capes and party dresses as the season's hot items, Robertson added: "Unlike last year when we were stocking down, we're stocking up, so Q3 to Q4 should be very strong for us."

The group has launched French and German language websites since the end of the period under review, following a US site launch in September. It said it planned to launch further country-specific websites at a faster pace. Mobile sites for Blackberrys and iPhones have also been rolled out.

Robertson said he was positive about the 2011 outlook despite austerity cuts and tax rises.