link.png ASOS giant hit hard← Back


Image source - asos.com
 
 
 
As Seen on Screen, better known as ASOS, is one of the leading fashion online retailers. But its position in the international marketplace has led to heavy impacts on its financial targets, with shares falling by 40% yesterday. This has had repercussions on Italian online retailer yoox.com, whose shares have also dipped. 
 
This fall follows ASOS's second profit warning in three months, that profits would be lower than predicted, standing at £45 instead of £66.5,. With the fiscal year ending in August, this means that ASOS will miss this year’s target by 30%. Commenting on the situation, Nick Robinson, ASOS’s chief executive, said: “Whilst our profit performance for this financial year is not what we had hoped for, due to an unusual combination of factors, our accelerated investment in technology and infrastructure to support our 2.5 billion sales ambition is progressing.”
The decrease in profits comes as a result of the strong British pound - which has risen in value by 10% over the past year –affecting ASOS’s sales overseas as international customers have had to pay higher prices. International sales made up 62% of overall sales in the three months leading up to end of May, compared to 67% in the previous year. The online platform consequently increased discounts in order to meet growth expectations – it went from having around 3% of stock reduced in sales, to 8%. A further factor that prompted this profit warning was linked to expenditure on infrastructure, due to ASOS investing heavily in warehouses to enable expansion. 
 
 With shares falling by 40%, ASOS’s market value has dropped by £1.2 billion, a situation which must naturally be cause for concern.