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Asos has seen $2.2 billion wiped off its market value after issuing a profit warning - with deteriorating conditions in the Australian market a key culprit.

The online fashion retailer downgraded its forecast profit margins to 4.5 per cent from 6.5 per cent.

This would suggest a $65 million net profit compared to the previous forecast of $117 million for the year to August 31.

While share prices stabilised to $56 after the announcement, this was a sharp decline to $130 in February.

With international sales making up around 60 per cent of the group total, the rising pound has caused problems for sales in key markets such as Australian and Russia.

CEO Nick Roberston said currencies in the two markets were down more than 20 per cent against the pound, which has risen to an almost six year high.

Australian customers faced an average 15 per cent increase in prices compared to a seven per cent drop for UK customers.

Robertson said traffic to the site and "frequency of purchase" rates had dropped due to price pressures.

It is understood Australia currently represents eight per cent of total sales.

US sales were up 17 per cent for the first three quarters compared with 59 per cent a year ago.

Sales growth across Europe hit 37 per cent compared with a 56 per cent rise a year earlier.

For the rest of the world, sales slowed to just one per cent compared with 38 per cent in the previous year.

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