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You can find the current article at its original source at https://www.theguardian.com/business/2018/dec/17/asos-issues-shock-profit-warning-as-november-downturn-takes-hold-fashion-retailer
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| Asos issues shock profit warning after November downturn | Asos issues shock profit warning after November downturn |
| (about 3 hours later) | |
| Asos has issued an unexpected profit warning after a poor November, becoming the latest retailer to be hit by weak consumer confidence, increased discounting and unusually mild weather. | Asos has issued an unexpected profit warning after a poor November, becoming the latest retailer to be hit by weak consumer confidence, increased discounting and unusually mild weather. |
| The downturn suggests the high street malaise is spreading to online retailers, with consumers worried about what Brexit will mean for their finances. | The downturn suggests the high street malaise is spreading to online retailers, with consumers worried about what Brexit will mean for their finances. |
| Shares in Asos crashed 37.5% to £26.14 , the lowest since September 2015 – wiping more than £1.3bnoff the firm’s market value. The rival online fashion retailer Boohoo tumbled almost 20% but cut the loss to about 14% after rushing out a statement saying that trading remained strong. | |
| John Lewis says sales fell 5.1% in the week to 8 December, after it failed to build on momentum generated by the Black Friday sales event. | John Lewis says sales fell 5.1% in the week to 8 December, after it failed to build on momentum generated by the Black Friday sales event. |
| Ted Baker reports a 3% drop in sales at established stores. | Ted Baker reports a 3% drop in sales at established stores. |
| Primark, the UK’s third-largest clothing retailer, behind Next and M&S, warns of “challenging” trading conditions after like-for-like sales turned negative in November. | Primark, the UK’s third-largest clothing retailer, behind Next and M&S, warns of “challenging” trading conditions after like-for-like sales turned negative in November. |
| Dixons Carphone slumps to half-year loss of £440m after writing down the value of its unprofitable mobile retailing brand. | Dixons Carphone slumps to half-year loss of £440m after writing down the value of its unprofitable mobile retailing brand. |
| Superdry shares plunge after its second profit warning in two months. | Superdry shares plunge after its second profit warning in two months. |
| The Sports Direct founder, Mike Ashley, warns that “November was the worst on record, unbelievably bad” for retailers, sending his company's share price down nearly 15%. | The Sports Direct founder, Mike Ashley, warns that “November was the worst on record, unbelievably bad” for retailers, sending his company's share price down nearly 15%. |
| The no-frills womenswear retailer Bonmarché issues a stark profit warning, saying trading is “significantly worse even than during the recession of 2008-09”. | The no-frills womenswear retailer Bonmarché issues a stark profit warning, saying trading is “significantly worse even than during the recession of 2008-09”. |
| The online fashion retailer Asos issues a shock profit warning after a poor November. | The online fashion retailer Asos issues a shock profit warning after a poor November. |
| Laura Ashley is to close 40 stores, a quarter of its UK outlets, putting hundreds of jobs at risk. Julia Kollewe | Laura Ashley is to close 40 stores, a quarter of its UK outlets, putting hundreds of jobs at risk. Julia Kollewe |
| Next and Marks & Spencer were also affected, with shares falling by 2.5% and 4% respectively. | Next and Marks & Spencer were also affected, with shares falling by 2.5% and 4% respectively. |
| Asos said big price cuts across the market had forced it to bolster its promotions to win customers after a dire November that the Sports Direct founder, Mike Ashley, last week described as “the worst on record, unbelievably bad”. | Asos said big price cuts across the market had forced it to bolster its promotions to win customers after a dire November that the Sports Direct founder, Mike Ashley, last week described as “the worst on record, unbelievably bad”. |
| The Asos chief executive, Nick Beighton, said: “In fashion we are seeing an unprecedented level of discounting, certainly something I have not seen before, and that’s across the board.” | The Asos chief executive, Nick Beighton, said: “In fashion we are seeing an unprecedented level of discounting, certainly something I have not seen before, and that’s across the board.” |
| He said he had been “astonished at the level of promotions and discounting, especially around Black Friday”, predicting heavy discounting would continue in coming months. | He said he had been “astonished at the level of promotions and discounting, especially around Black Friday”, predicting heavy discounting would continue in coming months. |
| Asos knocked 20% off everything on the Black Friday sales event, as it did in previous years, but its rivals offered bigger price cuts, Beighton noted. However, he denied that Asos had lost market share in the UK, saying overall consumer spending was down. Trading in France and Germany, which account for 60% of the company’s EU sales, was also poorer than expected. | |
| Brexit worries and bad weather cloud the Christmas high street | Brexit worries and bad weather cloud the Christmas high street |
| Neil Wilson, the chief market analyst at Markets.com, said: “If Asos is finding it tough out there, then just about every retail stock has a problem. We knew the high street was struggling due to structural shifts but Asos slashing guidance suggests things are even worse in the run-up to Christmas than previously thought for the sector and the strife extends well beyond the high street. | Neil Wilson, the chief market analyst at Markets.com, said: “If Asos is finding it tough out there, then just about every retail stock has a problem. We knew the high street was struggling due to structural shifts but Asos slashing guidance suggests things are even worse in the run-up to Christmas than previously thought for the sector and the strife extends well beyond the high street. |
| “In short, online businesses have seemed immune but the warning from Asos today suggests they, too, are at risk from the cyclical slowdown.” | “In short, online businesses have seemed immune but the warning from Asos today suggests they, too, are at risk from the cyclical slowdown.” |
| Russ Mould, the investment director at the stockbroker AJ Bell, said: “Consumers are feeling sufficiently nervous to put off purchases no matter how they make them. This will strike fear into other internet-based retailers and more traditional rivals who were banking on their web-based portals to get them out of trouble.” | Russ Mould, the investment director at the stockbroker AJ Bell, said: “Consumers are feeling sufficiently nervous to put off purchases no matter how they make them. This will strike fear into other internet-based retailers and more traditional rivals who were banking on their web-based portals to get them out of trouble.” |
| Asos expects sales growth of 15% for the year to August 2019, instead of the 20-25% it had previously pencilled in. This prompted the firm to cut capital spending by £40m to £200m. | Asos expects sales growth of 15% for the year to August 2019, instead of the 20-25% it had previously pencilled in. This prompted the firm to cut capital spending by £40m to £200m. |
| It is struggling to sell pricier clothing such as women’s coats and men’s branded trainers, priced at £55 to £150, with cash-strapped customers opting for cheaper items. | It is struggling to sell pricier clothing such as women’s coats and men’s branded trainers, priced at £55 to £150, with cash-strapped customers opting for cheaper items. |
| Beighton noted that the disposable incomes of Asos’s twentysomething customers were still below the levels they were at a decade ago. “It’s more than just the Brexit-related factors,” he said. | Beighton noted that the disposable incomes of Asos’s twentysomething customers were still below the levels they were at a decade ago. “It’s more than just the Brexit-related factors,” he said. |
| The retailer experienced a “significant deterioration in the important trading month of November”, it said, with only a small uptick in sales in December. It blamed economic uncertainty across many markets, including Germany and France, for the weakest growth in online clothing sales in recent years. | The retailer experienced a “significant deterioration in the important trading month of November”, it said, with only a small uptick in sales in December. It blamed economic uncertainty across many markets, including Germany and France, for the weakest growth in online clothing sales in recent years. |
| Mild weather in September and October also hurt retailers, which struggled to sell their autumn and winter ranges. | Mild weather in September and October also hurt retailers, which struggled to sell their autumn and winter ranges. |
| Asos reported £656m of sales for the three months to 30 November, up 14% on last year. Its average selling price dropped 6%; the average basket size rose 3% but the average basket value was down 3%. Beighton said: “Those are trends I have not seen for the best part of nine years.” | Asos reported £656m of sales for the three months to 30 November, up 14% on last year. Its average selling price dropped 6%; the average basket size rose 3% but the average basket value was down 3%. Beighton said: “Those are trends I have not seen for the best part of nine years.” |
| The retail analysis firm Springboard forecasts footfall on Britain’s high streets will fall by about 3% this week, the last full week before Christmas. | The retail analysis firm Springboard forecasts footfall on Britain’s high streets will fall by about 3% this week, the last full week before Christmas. |
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