Online retailer Asos issues sales and profit warning
PUBLISHED: 08:30 17 December 2018 | UPDATED: 08:47 17 December 2018
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Online retailer Asos has warned over sales and profits after experiencing a "significant deterioration" in trading in the run-up to Christmas.
The trend follows that of the bricks-and-mortar high street stores, with major retailers like Debenhams and House of Fraser announcing store closures and a buyout respectively, due to tough trading conditions.
Asos 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; with growth of 15% for the year to August 2019.
Its anticipated earnings margin has been revised down from 4% to 2%.
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.
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.