- ASOS confirms profit to be at low end of forecast
- Online fashion retailer hit by consumer belt tightening
- August sales missed expectations
Online fashion retailer ASOS (ASC) has confirmed it saw weaker than expected sales in August as inflation impacted shoppers’ purchasing power as well as ‘a slow start’ to the Autumn-Winter selling season.
As a result, adjusted pre-tax profit for the year to August 2022 will be ‘around the bottom end’ of the £20 million to £60 million guidance given by the company in June, itself a sharp cut from previous expectations of £110 million to £140 million.
NEGATIVE NEWS PRICED-IN
ASOS’ bombed-out shares rallied 2% to 692p despite the downbeat news, because the warning came as no surprise to the market.
A damaging Sunday Times article had already relayed that ASOS had privately briefed City analysts that profits were at the low end of forecasts.
NEGLIGIBLE GROWTH
In today’s statement, embattled ASOS said it expects to report anaemic sales growth of circa 2%, below the 3.2% called for by consensus, and year-end net debt of around £150 million, which is materially higher than the £77 million the market was looking for.
ASOS saw ‘good growth’ in June and July, but sales weakened in August amid a deepening cost of living crisis that is leaving its core 20-something customer demographic with less disposable income.
‘While ASOS remains cautious about the outlook for consumer spending, it continues to make strategic progress and manage the business for the current environment,’ insisted the company.
‘Consensus revenue forecasts have been coming down ahead of this update, but we expect will fall towards being broadly flat year-on-year, with the company likely looking to focus on margin recovery in a challenging trading environment,’ explained Numis Securities.
‘Guidance for next year is likely to be given at the full year results on 12 October.’
