Major UK retailer shows weakest growth in recent years

Asos has issued a profit warning

Major UK retailer shows weakest growth in recent years. Source: shutterstock.com

Major UK retailer Asos has issued a profit warning after it saw a “significant deterioration” in sales growth, Ecommerce News reported. After the online fashion retailer has shared this unscheduled trading update, shares dived by almost 40% when the market opened.

Asos says that one of the reasons for the alarming figures is the high level of discounting and promotion activity among competitors. This has led to increasing its own special offers, which had come at a cost to profit margins. And the warm weather during the last three months has also led to shoppers spending less at Asos, the company explained.

Although we delivered solid growth in sales of 14%, we experienced a significant deterioration in the important trading month of November and conditions remain challenging. As a result, we have reduced our expectations for the current financial year. November, a very material month for us from both a sales and cash margin perspective, was significantly behind expectations. The current backdrop of economic uncertainty across many of our major markets together with a weakening in consumer confidence has led to the weakest growth in online clothing sales in recent years
Asos’ trading update

Asos also explains that trading conditions in Germany and France, which account for 60% of Asos’ European sales, have become “significantly more challenging, with the performance of these two countries at +15% year to date.”

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