Online fashion retailer ASOS said its strategy of cutting prices in international markets to reverse a slowdown in sales growth was building momentum after three profit warnings last year.

Although ASOS posted a 10 per cent fall in first-half profit, it exceeded analyst forecasts and the firm said it was confident of hitting profit expectations for its 2014/15 financial year, sending its shares up to nine per cent higher.

Until last year ASOS, which has Glasgow born businessman Brian McBride as its chairman, had been the success story of British retail firms and a darling of the stock market, helped by its appeal to internet savvy young people along with high-profile fans such as British singer Rita Ora and US First Lady Michelle Obama.

Having floated at 20 pence in 2001, ASOS shares hit a high of £71.95 in February 2014. Though the stock has fallen by a quarter over the last year, trading at £39.41 at this morning.

The firm still has a market capitalisation of £3.2 billion, or more than three times the value of high street stalwart Debenhams.

ASOS said it made a pre-tax profit of £18m in the six months to February 28, ahead of analysts' average forecast of £16.3m but down from £20.1m made in the same period a year earlier.

ASOS's international price cuts resulted in a gross margin decrease of 230 basis points. That, and increased investment in infrastructure, such as an automation programme at its huge warehouse in Barnsley, northern England, ate into profits.

The price cuts are helping to counter the impact of the large drop in the value of the euro against sterling.

ASOS's first-half retail sales rose 17 per cent on a constant currency basis to £536.4m, with UK sales up 27 per cent and international sales up 10 per cent.

"This investment programme, this sort of two-year journey of price investment, seems to be delivering positive results in our international sales performance," chief executive Nick Robertson said. "We feel we're building momentum."

Analysts are on average forecasting a 2014-15 pre-tax profit of £45m, down slightly from £47m in 2013-14.

But the firm still has its doubters. "We continue to have question marks ... over the robustness of the model and believe the company will have to continue to discount and offer free delivery charges and returns to maintain sales momentum," said Cantor Fitzgerald analyst Freddie George.

Mr Robertson said ASOS' next "staging post" will be £2.5bn of annual sales, though he declined to say when the firm would reach it.

"Ultimately the business is going to be considerably bigger than it is today," he said.