Curtis Wool Direct

Asos issues profit warning over fashion discounting

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Online fashion retailer Asos has warned of lower profits this financial year after heavy discounting hit its trading in November. Despite sales growth of 14% from September to November, it had seen “a significant deterioration” in November.

Economic uncertainty plus weaker consumer confidence had led to “the weakest growth in online clothing sales in recent years”.

“As a result, we have reduced our expectations,” the firm said. “Whilst trading in September and October was broadly in line with our expectations, November, a very material month for us from both a sales and cash margin perspective, was significantly behind expectations,” Asos said.

“There has been a high level of discounting and promotional activity across the market. We have increased our own level of promotional activity, leading to a higher discount and continued high clearance mix.

“This increased discounting, coupled with the unseasonably warm weather during the last three months has reduced our ASP [average selling price], which has not been compensated by higher units per basket.”

Over the three-month period, total group revenue was £656m, up from £576.7m in the same period last year.

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