ASOS posts fresh profit warning, sparking fears star is starting to wane
ASOS has left investors nursing wounds - but the website's young shoppers could see prices fall.
ASOS has posted another profit warning, sparking fears its star is starting to wane.
Chief executive Nick Robertson blamed the worst year in the online retailer’s history in which a warehouse fire damaged stock and the strong pound dented fourth-quarter sales.
Shares fell 8.88 per cent to 2207p after the firm warned full-year profits were set to be lower than previously expected.
Analysts had forecast profits of £62m but these are now likely to fall to £45m due to investment in modernising its systems and cutting prices.
The firm warned: ‘In the new financial year we’ll make significant investments in our international pricing and proposition, as well as in our logistical infrastructure and technology platform.
‘As a result, we expected profit before tax for the year to August 31 to be at a similar level to 2013-14.’ Retail sales for the three months to August 31 increased 15 per cent, a slowdown from the 25 per cent seen in the previous quarter.
ASOS warned in June that profit for 2013-14 would miss the forecast at the time by 30 per cent as the strength of sterling caused a slowdown in international sales growth.
It also spooked the market in March when it announced plans to increase spending on infrastructure to meet future demand at the expense of short-term profits.
This is on top of the fire which disrupted trade, although the business is insured.
Downward trend: ASOS wowed global investors with shares that just kept rising to a peak of 7,000p in February - but then disaster struck in the shape of multiple profit warnings.
The international business now accounts for 60 per cent of sales but the strong pound means prices have risen by up to 20 per cent in some markets.
The result is that over the year the share of international sales has declined from 63 per cent to 61 per cent, with Australia and Russia dragging sales down.
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