Asos shares fall further than Naomi Campbell in heels

Shares in the fashion e-commerce giant plunged 14% this morning after its third profit warning in less than a year.

by Rachel Savage
Last Updated: 09 Dec 2014

It may be London Fashion Week, but Asos would probably rather hide at the back of a wardrobe rather than stride down a catwalk this morning. Its shares plunged almost 14%, after it issued its third profit warning in less than a year.

Although UK sales increased a stiletto-staggering 33% to £98m in the three months to the end of August, international sales grew a comparatively paltry 6%. That meant total revenues in the fourth quarter rose 16% to £245m – growth most company bosses would give a tailored suit-clad arm for, but far less than the +20% investors had become used to.

The strong pound is the hot trend behind Asos’ overseas woes. The fashion etailer will be pricing in local currency, as well as opening up more warehouses abroad, by the end of the year, chairman Brian McBride told MT in June. But it originally planned to have that rolled out by April and the delay is proving costly.

Meanwhile, a fire at its Barnsley warehouse in June lost it £25m-£30m of sales. It didn’t report its profits, which it said will be flat over the next year. But analysts expect it to be £45m for the 2013-14 year, down from £55m last year.

Asos chief executive Nick Robertson was unusually frank in an interview with the FT. ‘If you think about my demographic, they’re buying value fashion. In the UK I can do that, and I’m good at doing that. Overseas, I’ve lost that ability.’

It’s refreshing to hear a company boss admitting the obvious, rather than cloaking bad news in corporate jargon, but shareholders were still not impressed. Shares were down more than 10% to 2,173p in mid-morning trading, having dropped 13.7% when the markets opened. They’ve now fallen more than 64% since the beginning of the year. That’s one trend Asos will be hoping doesn’t have legs

Source: Yahoo Finance

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