Home / Articles / Online retailer ASOS drops 11% on warning

Online retailer ASOS drops 11% on warning


ASOS, the online fashion retailer popular among 20-somethings, has warned its full-year sales growth will be at the “lower end” of expectations.

Its shares fell as much as 11% in early trading in London as the company also missed its sales forecast.

Although total retail sales rose 22% to £802.7m in the four months to 30 June, it was below analysts’ expectations of 25.8%, as well as the 27% it reported in the first half.
ASOS expects full-year sales growth to be “towards the lower end” of a 25% to 30% range.
Despite missing the forecast, ASOS and rival Boohoo have benefited as consumers move away from traditional high street retailers in favour of shopping online.
E-commerce now represents 18% of UK retail sales, with struggling brick-and-mortar brands such as House of Fraser cutting jobs and closing stores.
With a market valuation of £5.47bn – exceeding that of Marks & Spencer – ASOS is spending millions on its technology and logistics to take on Amazon.
It will open a new warehouse in Atlanta, Georgia, and the second phase of a distribution centre in Berlin later this year.

Chief executive Nick Beighton said: “As well as managing 22% growth we’re also managing demand around key infrastructure programmes.
“There’s certain quarters where you go for growth and certain quarters where you manage demand around your infrastructure periods – the last four months has been categorised by that.”
UK retail sales rose 23% to £288m, sales in the EU soared 31% to £257.4m, and US sales increased 15% to £108.1m, the company said.
ASOS expects its profit before tax to be in line with consensus forecasts for the year.
Despite the company’s stock falling, analysts were still enthusiastic about ASOS.

More from Business

“In our view, ASOS remains a structural winner given the shift online together with its global aspirations,” Greg Lawless, research analyst at Shore Capital, said in a note to investors. He recommends investors buy the stock.
And Sofie Willmott, senior retail analyst at GlobalData, said: “With high investment planned to support growth across the board, ASOS’s international results are not a cause for concern.”

Source: Sky

About Business Ideas UK

My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups. I am an author of various websites including Franchise UK https://www.franchise-uk.co.uk

Check Also

Another 40 Poundworld stores to close

Forty more Poundworld stores are to close later this month, leading to the loss …

Free Franchise Guide

Free Franchise Guide

 
Interested in buying a franchise? The our FREE Franchise Guide is a must! The guide contains lots of information to help you decide if franchising is right for you.
 

Yes, I'd like to join the Franchise UK mailing list.