ASOS which has, to date, been pretty much unscathed by the difficult trading conditions affecting others fashion retailers surprised the market today by issuing a profit warning, saying that it had been impacted by weaker demand in November. Ordinarily bullish ASOS has lowered its full year profit forecast to August 2019 to 15 per cent growth rather than the 20-25 per cent it has earlier predicted. Even though its revised forecast is still considerably better than that being made in the wider market the announcement caused its share price to nosedive by 41 per cent on Monday morning to £24.55 and also saw arch competitor Boohoo’s share price fall by an initial 20 per cent, though the latter recovered after issuing a statement.
ASOS had entered the Black Friday promotion with a 20 per cent across the board discount as in previous years but others had promoted much deeper price cuts. CEO Nick Beighton commented: “In fashion, we are seeing an unprecedented level of discounting, certainly something I have not seen before, and that’s across the board.” He admitted that the business had reduced its marketing spend in October in favour of investment in voice technology and AI, however, it will now return budget for brand marketing, whilst trimming capital expenditure. Onlookers suggest that Asos along with the wider fashion sector will be facing far greater challenges in the year ahead.
Sales for the three months to November 30th came in at £656 million which represented an increase of 14 per cent over the same quarter last year with average basket value down by 3 per cent. It wasn’t UK customers reining in their spend which impacted the figures, but those in France, Germany and Australia cutting back due to general economic uncertainty dampening their confidence.
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