Asos sales hit by young shoppers feeling squeeze

ASOS has warned that sales are suffering from the cost of living crisis as soaring inflation prompts young shoppers to rein in their spending.

The fast-fashion retailer said “good growth” across June and July had slowed in August, with sales across the month proving weaker than expected.

Updating the market, the company said it was cautious about the outlook for consumer spending and that annual profits would come in at the bottom end of its targets.

Its concerns are the latest signs of the mounting pressure on household spending.

The downturn is a fresh blow for retailers following the problems caused by the supply-chain crisis and the collapse of highstreet shopping during the Covid pandemic.

Asos said: “Full-year sales, adjusted profit before tax and net debt are anticipated to be in the range of market expectations .

“However, after having seen good growth in June and July, sales in August were weaker than anticipated. This reflected the impact of accelerating infla- tionary pressures on consumers and a slow start to autumn/winter shopping.”

Data show the average British household is facing a £3,000 hit to their spending power by the end of the year.

Incomes could fall by as much as 10pc, according to the Resolution Foundation think tank, which warned that 3m people are at risk of being plunged into poverty.

However, Prime Minister Liz Truss has moved to steady the impact on people’s finances by announcing she will freeze energy bills at £2,500 a year on average.

The concerns from Asos come just days after the founding family of Matalan reportedly put the discount chain up for sale.

John Hargreaves has hired advisers from Lazard to find a new financial backer or a potential buyer for the business.

The company sealed a £60m revolving credit facility in June in an attempt to shore up its balance to help weather the pressure caused by sliding demand.