SHARES in online fashion retailer ASOS have sunk by more than 16 per cent after the firm increased its spending plans to deliver long-term growth.

The Barnsley-based firm said it would spend £68 million this year to increase its warehouse space and improve IT systems.

It is hoped this investment will boost its sales to £2.5bn a year.

In the first two months of 2014, total sales were up 26 per cent from a year earlier, with the retailer seeing its strongest performance in the EU, where sales rose 57 per cent in the same period.

Nick Robinson, CEO of ASOS, said: "The £68m investment will reduce our EBIT margin for the current financial year, but we have seen 8.2 million active customers and that is a 36 per cent increase from last year."