The FTSE 100 is a bit lower this morning, down 0.2% to 6,832.58 on continuing uncertainties linked to global trade and Brexit.
But there is only one place to start this morning and that is with the shockwaves being sent through the retail sector by a major profit warning from online fashion firm ASOS (ASC:AIM).
Shares in the company plunge 37.8% to £26.02 as it reveals that for the current financial year to August 2019, sales growth will hit about 15% from a range of 20% to 25% previously, the retail gross margin is expected to decline by 150 basis points from 49.9% previously, and earnings (EBIT) is was expected at close to 2% to from 4% previously.
Total sales are up at 14% on a reported basis and 13% on a constant currency basis during the fiscal first quarter, and retail gross margin fell 160 basis points as average selling prices fell 6%.
In the UK, sales growth was 19% year-to-date , though margins were hurt by more promotional activity than initially planned as consumer confidence was increasingly fragile, the company says.
The main culprit behind the warning is weak trading in the crucial month of November. The struggles of ASOS, which is plugged into the structural shift away from the high street and therefore perceived as better placed than some of its more traditional peers, is creating real fear.
Retail bellwether Next (NXT) dips 4.3% to £41.51, fellow online play Boohoo (BOO:AIM) is down 14.8% to 156p and Quiz (QUIZ:AIM) falls 12.6% to 29.5p.
The other major news out this morning is that SSE (SSE) is pulling the plug on a merger of its retail energy business with nPower. Its shares dip 1.4% to £10.74.
The power utility says it will now consider other options for the business instead, including a de-merger or outright sale to another company.
SSE says the deal has been impacted by 'multiple factors' including the performance of both the businesses that were to be merged, government price caps and energy market conditions.
Oil services firm Hunting (HTG) sounds a cautious note on 2019 in a trading update, leading the shares to drop 5.3% to 486.4p.
The company says performance to the end of November remained in line management's expectations but is more tentative on the upcoming year on expectations that customers may delay orders.
Fourth quarter operating profits are expected to show a marginal decline compared to the previous two quarters, owing to increased competition and market softness in its US onshore businesses as public holidays and the exhaustion of clients' budgets weighed on daily sales run-rates.
Hunting anticipates that capital expenditure for the full year 2018 will be about $30m.
