Jul 18, 2019
Asos shares plummet on third profit warning in 7 months
Online fashion retailer Asos warned profits would be more than a third lower than expected this year due to a botched warehouse upgrade that limited the availability of stock to shoppers in the US and Europe. The downgrade is the latest blow to Asos, which has now issued three profit warnings in seven months, including one just before Christmas that knocked 40 per cent off its value. Sales in the UK and Ireland remained strong in the four months to the end of June, with Asos reporting 16 per cent growth in sales at constant currency to £334m. "The UK performance is relatively robust but clearly the warehouse transition in both Europe and the US has seen significant growing pains in recent months, which in our view have been self-inflicted by the company," analysts at Shore Capital said. Analysts at RBC remained bullish, saying Asos had "An impressive record in the UK, and if it can achieve even a third of its UK success in the US and Europe, we believe group sales can triple in 10 years". Total sales growth in the period was 12 per cent, while revenue rose 12 per cent year on year to £919.8m. Asos flagged £47m in transition costs, £3.5m in restructuring costs and an increase in net debt to £100m from the £37.6m it reported in its most recent results in April.
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