Another blow for fashion victim Asos
ASOS’S shares dived 23pc last night after it issued its third profit warning in seven months.
The internet fashion company – once a darling of Britain’s online retail scene – said that sales were hit by problems at its warehouses in the US and Europe.
Asos said this meant a more limited range of products has been stocked on its website, leaving customers unable to buy certain styles and sizes.
The firm expects to make profits of up to £35m, significantly lower than the £55m forecast by analysts.
It sparked fury from market watchers who said urgent action is needed to steady the ship.
Stockbroker Liberum said: ‘Serious questions need answering.
‘Operational issues in Europe and the US signal to us a lack of enough senior leaders in the business with the adequate skill- set to undertake the complex capital projects ongoing.’
The sell-off means Asos is worth less than internet-only rival Boohoo, which launched six years after its rival, and has a price tag of £2.5bn compared to Asos’s £1.8bn.
It is the third profit warning by Asos as it suffered from a slowdown in customer growth and problems with supplies.
The latest hit came from issues at its US warehouse in Atlanta, where the company struggled to get stock from suppliers on time because of extra documentation and checks by US authorities on the chemicals used in its clothes which they were not used to.
Meanwhile, a warehouse in Berlin suffered because new software was unable to cope with the large volumes of returned goods being returned by customers who wanted to try clothes on and then send back ones they do not like.
Previous warnings came at the height of the Christmas trading period, when the company said it was struggling due to unprecedented discounting in sales by rivals; and in March, when it said that demand was sluggish in the UK, France and Germany. Nick Beighton, chief executive, said: ‘We are taking all appropriate actions and our ambitions for Asos have not changed.’
The company, formerly known as As Seen On Screen, was started in 2000 by Nick Robertson, who is the great-grandson of fashion magnate Austin Reed, and Quentin Griffiths. Taking inspiration from technology giant Amazon and Sir Philip Green’s Topshop, the pair launched the website, which initially stocked 600 products aimed at fashionconscious shoppers in their 20s.
Just a year later, Asos listed on London’s junior market AIM with a value of £12m. It now sells 85,000 different products from a range of brands including All Saints, New Look and Warehouse, as well as its own-label ranges such as Asos White and Collusion.
Demand for its cheap and cheerful clothing has boosted sales and the company is now worth £1.8bn.
But since earning its status as a stock market darling, Asos and its investors have had a torrid time of late.
Shares have plunged by almost two-thirds over the past year amid concerns that management is struggling to run the everyday business, while the company embarks on a major expansion overseas.
However, in a sign of confidence in the company yesterday, chairman Adam Crozier snapped up 4,200 shares for 238p each.
But that didn’t prevent the stock from plunging 23.2pc, or 636p, to 2107p.