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Asos issues profit warning as sales slow

Asos has issued a profit warning ahead of its full year results, citing a slow in international sales and increased levels of promotional activity for its disappointing profit performance.

The etailer, which this morning published results for the three months to May 31, has lowered earnings margin guidance from 6.5% to around 4.5%.

Chief executive Nick Robertson said Asos’ “profit performance for this financial year is not what we had hoped for due to an unusual combination of factors”, including a higher mix of UK and European sales, which carry lower retail margins, as well as increased levels of promotional activity.

Retail gross margins were down about 370 basis points in the quarter.

Total group sales reached £248m, with growth slowing to 26% for the three months to May 31, from 34% for the same period in 2013. UK sales rose 43% to £91.8m.

International sales growth slowed to 17% from 28%, with growth outside Europe and the US dropping to 1%, compared with 16% during the same period in 2013.

Chief executive Nick Robertson said this decline came from the strengthening sterling, an issue he has previously warned on.

Robertson added: “Our accelerated investment in technology and infrastructure to support our £2.5bn sales ambition is progressing and capex remains within guided levels… All customer metrics - active customers, new customers, order frequency and units per basket - are positive and we are totally focussed on rolling out the Asos business model globally as the world’s leading online fashion destination for 20-somethings.”

 

Readers' comments (1)

  • Early days for Asos still, it's got teething pains but this is a business that is no where near maturity, over valued, yes probably but then that's the city for you, short term the whole e-tail sector is pretty much over valued.

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