Asos warns of weaker sales as consumers cut spending

British fast fashion company Asos Plc warned that August sales were weaker than expected as inflation hit shoppers’ spending power.

Full-year profit will come in at the lower end of guidance, with sales growing just about 2 percent, according to a release on Friday. The online retailer also cited a slow start to its fall/winter ranges. The stock fell as much as 4.2 percent in early trading in London.

“Asos remains cautious about the consumer spending outlook,” the company said.

Earnings season should continue to be tough for retailers. Associated British Foods Plc, owner of household chain Primark, warned on Thursday that profit will fall next year under pressure from rising energy costs and a strengthening dollar.

Asos is having a difficult year and issued a surprise profit warning in June as the cost of living crisis hit consumer spending power. The company warned in April that its earnings target was threatened by inflation and disruptions from the war in Ukraine. The lower end of the forecast is £20m ($23m).

The company’s top management team is also changing again, with Mat Dunn overseeing the business after Nick Beighton left last year, leaving the company and handing it over to Chief Commercial Officer Jose Antonio Ramos Calamonte as CEO.

Shoppers are navigating the UK with the highest inflation in four decades and there are signs they are cutting back on buying clothes and other non-essential items. Retail sales growth slowed to just 1 percent last month and fashion sales were sluggish, the British Retail Consortium and consultancy KPMG said in a report.

For many years, Asos was a stock market favorite, reporting rising sales and profits. More recently, the company has struggled with supply chain issues and the shift from online shopping back to stores after Covid restrictions were lifted.

Last year, Asos acquired the Topshop, Topman, Miss Selfridge and HIIT brands from Philip Green’s failed Arcadia. Since then, US department store Nordstrom Inc. has taken a minority stake in the brands through a joint venture.

The stock is down more than 70 percent this year. Some hedge funds are betting that it must fall further. Marshall Wace, Qube Research &; Technologies Ltd. and others have taken short positions totaling about 6 percent of Asos stock, up from about 3 percent earlier this year.

https://www.independent.ie/business/world/asos-warns-of-weakening-sales-as-consumers-cut-spending-41974973.html Asos warns of weaker sales as consumers cut spending

Fry Electronics Team

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