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Fashion retailer shares slide on Asos profit warning

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Written by: Danielle Levy
17/12/2018
Shares in online fashion retailer Asos tumbled 40% on Monday morning, following a profit warning.

The news caused other listed fashion retailers to come under pressure, with online rival Boohoo’s shares falling 11% on Monday morning.

In a trading update, Asos said that in spite of a 14% increase in total sales, the business had experienced a significant deterioration in trading during November.

Looking ahead, it said conditions remain challenging for the business. It cut its expectations for full-year sales growth from 20-25% to 15% and said its gross profit margin would drop by 150bps.

Asos’s profit warning suggests that it is not only the high street that is currently under pressure – with online retailing also feeling the pinch. The company’s comments tally with recent analysis by Springboard, which showed a 3.2% decline in footfall on the high street in November – in spite of the Black Friday deals.

Asos pointed to economic uncertainty across many of its major markets and lower consumer confidence, resulting in the weakest growth in online clothing sales in recent years.

“It was notable that Asos’ peer Boohoo also issued a brief trading update which provided quite a strong contrast and suggests that the issues are more specific to Asos rather than widespread across the sector,” said Ian Forrest, investment research analyst at The Share Centre.

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