Asos Falls Most in Three Months on Weak Second-Quarter Sales
Asos Maintains Full-Year Outlook After December Profit Warning
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Asos Plc fell the most since December after second-quarter sales growth fell short of the online fashion retailer’s already reduced full-year target.
It’s the biggest fall since the company issued a profit warning following a “significant deterioration” in November sales, cutting its full-year guidance to 15 percent growth from a range of 20 percent to 25 percent. Asos’s retail sales rose 11 percent in the three months ended Feb. 28, leaving it playing catch-up to reach its target.
The restrained update from an online retailer that competes with Amazon.com Inc. and has furnished fashions to the likes of Meghan Markle shows that the U.K.’s retail crisis is not just impacting bricks-and-mortar stores.
Shares fell as much as 13 percent to 2,790 pence in London trading, though they recovered to more modest losses later in the session.
“Asos’s first-half trading statement isn’t as reassuring as might have been hoped following its shock downgrade in December,” Paul Hickman, an analyst at Edison Investment Research, wrote in an emailed comment. “This leaves a task for the second half to get back to the guidance, which is not an ideal message for a business which has already lowered targets.”
Asos said it’s looking to improve its U.S. business after unexpectedly high demand there caused “a significant short-term dispatch backlog which we have now cleared” at its Atlanta warehouse. It’s looking to cut prices and raise marketing spending in the second half, particularly in its largest markets, France and Germany, which continue to be challenging.
Sales in the company’s own-brand range, which makes up 35 percent of its total goods, only slightly improved improved in the quarter after a disappointing first-quarter performance, Chief Executive Officer Nick Beighton said on a call with analysts. Asos maintained its full-year outlook.
To contact the reporter on this story: Ellen Milligan in London at emilligan11@bloomberg.net
To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John J. Edwards III, Thomas Mulier
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