Online fashion giant Asos says it took an £18.3 million hit on activities relating to its Leavesden office.

It comes as the retailer said it sank to a pre-tax loss for the six months to the end of February, the Press Association reported.

Asos said it also expects to take a £14 million hit from its decision to stop selling clothes in Russia, in response to the country’s invasion of Ukraine.

Bosses said they saw a marked slowdown in sales during the period as the benefits from the Covid-19 pandemic eased with shoppers able to head back to high streets.

Sales still rose by 1 per cent to £2 billion in the six month period but a £106.4 million pre-tax profit in 2021 turned to a £15.8 million pre-tax loss for the six months to the end of February.

The retailer said it felt the effects of supply chain disruption and limited stock availability and expects the next six months to be more challenging due to inflationary pressures.

Losses were attributed to £30.6 million spent on upgrading the business.

These included £7.9 million on launching a new strategy for the fashion retailer, £5.5 million to move from the junior AIM stock market to the main FTSE stock exchange, £18.3 million relating to its Leavesden office and £6.4 million due to its takeover of Topshop.

However, Asos is hopeful sales growth will accelerate this year, highlighting improvements in stock levels, a return of event and holiday-led demand and an easing of supply chain issues.

Chief operating officer and finance chief Mat Dunn said he was “really happy” with the group’s current stock levels following the period hampered by longer supply times.

He added shipping delays have reduced but freight costs still remain about five times higher than pre-pandemic levels and are one of the firm’s key inflationary pressures.

Mr Dunn added: “Asos has delivered an encouraging trading performance, against the continuing backdrop of significant volatility and disruption.”