Online retailer ASOS Christmas sales falter
- Credit: PA
Online retailer Asos has warned over sales and profits after experiencing a “significant deterioration” in trading in the run-up to Christmas.
The group said in an unscheduled trading update for the first three months of the financial year that, while it delivered sales growth of 14%, it “experienced a significant deterioration in the important trading month of November and conditions remain challenging”.
As a result, Asos has reduced its expectations for the current financial year. It now expects sales growth of 15% for the year to August 2019, down from 20% to 25%, and its anticipated earnings margin has been revised down from 4% to 2%.
Asos shares collapsed in morning trade, dropping 36% to 2,667p at the market open.
The warning will cause alarm among retailers as, up until now, it has been high street firms bearing the brunt of a brutal Christmas trading period.
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Asos pointed to a high level of discounting and promotional activity across the market, leading it to increase its own special offers, which typically eat into profit margins.
Unseasonably warm weather during the last three months has also seen reduced spending by shoppers, Asos added.
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However, in the UK, Asos said it continues to “materially outperform”, although this has been achieved at the cost of more promotional activity than initially planned and consumers buying into lower priced product.
Trading conditions across Germany and France, which account for 60% of the retailer’s EU sales, have become significantly more challenging,