Dec 17, 2018

Asos warning on trading adds to retail fears

Asos signalled that the consumer uncertainty that has weighed on high street shop chains is hitting the online sector, with the web-only fashion retailer warning of a "Significant deterioration" in trading. The downturn in performance at Asos comes after consultancy Springboard said that the number of people visiting British shops in November was the worst since the 2008 recession, with so-called footfall at retail parks and high streets down 3.2 per cent on the year before. On Monday, Asos also forecast that its sales growth for the year to August would be around 15 per cent, down from the 20 per cent to 25 per cent it had been expecting. The group said its retail gross margin, a measure of mark-up, will fall 1.5 percentage points in the year ending August 2019, from its previous expectation that it would be flat at 49.9 per cent. Asos added that while its UK trading was continuing to outperform the market, with a 19 per cent increase in the three months to November 30, compared to the same period last year, "This has been achieved at the cost of more promotional activity than initially planned and consumers buying into lower priced product."

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