Asos suffers sales hit from wet summer weather
The online fashion firm said that full-year underlying earnings were now expected around the bottom end of its £40 million to £60 million guidance.
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Your support makes all the difference.Online fashion firm Asos has warned earnings will be at the lower end of its guidance as it revealed wet weather in July and August knocked demand for clothes.
The group said UK sales tumbled 16% in its final quarter, with poor weather compounding woes amid a worsening UK clothing market.
The fourth quarter decline left like-for-like comparable UK sales 13% lower overall in the year to September 3.
Total group comparable sales fell 15% in the final quarter and 11% over the year, Asos said.
It said that full-year underlying earnings were now expected around the bottom end of its £40 million to £60 million guidance, while it said cash flow had suffered a £60 million hit from the weaker July and August trading.
We have reduced our stock balance by around 30%, significantly improved the core profitability of the business and generated cash against a very challenging market backdrop
It said this cash flow impact would unwind in September and October.
But the group said that despite the summer sales blow, it expects to be profitable again in its fourth quarter, with turnaround efforts having driven around £300 million of profit improvement and cost savings – in line with targets.
Jose Antonio Ramos Calamonte, chief executive of Asos, insisted the clothing retailer was a “leaner and more resilient business” after a year of his overhaul plan.
“We have reduced our stock balance by around 30%, significantly improved the core profitability of the business and generated cash against a very challenging market backdrop,” he said.
Asos recently cheered returning to profitability in its third quarter thanks to recovery efforts.
But its sales have suffered as consumer spending took a knock, with customer demand waning in the face of rocketing household bills, while the firm has experienced supply disruption and surging cost pressures over the past year.
Asos also said it has been losing customers amid the overhaul, with active customers down around 9% year-on-year at 23.3 million – a fall of about 3% since the third quarter.
The group has suffered heft share prices falls over the past year as trading woes have taken their toll, with the firm demoted from the FTSE 250 Index in June.