Asos shares plunge by 40% as profit warning rocks retail sector - as it happened
Rolling coverage of the latest economic and financial news, as online fashion group suffers a "significant deterioration" in pre-Christmas trading
- Latest: Asos shares plunge
- Asos holds conference call after profits warning
- Introduction: Asos profits warning!
- Full story: Asos has cut sales and profit forecasts
- Trading weaker in UK, France and Germany
4.59pm GMT
Finally, after a very rocky day, ASOS shares have closed at 26.14, a slump of 37.5%.
That wipes 1.3bn off its value, sending it slumping from 3.5bn to 2.2bn.
ASOS share price. (was at 5074 2 weeks ago) pic.twitter.com/wRkc9tQW9U
Asos has issued an unexpected profit warning after a poor November, becoming the latest retailer to be hit by weak consumer confidence, increased discounting and unusually mild weather.
The downturn suggests the high street malaise is spreading to online retailers, with consumers worried about what Brexit will mean for their finances.
Related: Asos issues shock profit warning after November downturn
3.31pm GMT
David Madden, market analyst at CMC Markets UK, says Asos's profits warning at 7am today has hurt the retail sector badly today:
The UK retail sector took a knock today after well-known ASOS shares were battered on the back of an earnings warning.
ASOS shares have slumped after the online fashion house announced a profit warning. The group said that sales from September to November jumped by 14%, but there was a 'significant deterioration' in November. The company previously predicted full-year sales growth of 20-25%, and now it anticipates just 15%. Profit margins have been revised down to 2% from 4%. Nick Beighton, the CEO, warned that the sector is experiencing 'unprecedented levels of discounting'.
3.24pm GMT
UK retailers aren't the only people feeling gloomy -- America's builders are also feeling a chill.
This won't have improved animal spirits. U.S. homebuilders' confidence drops very sharply: pic.twitter.com/ws0DIUXJwI
2.59pm GMT
Back in the City, UK retailers are being hit even harder.
Next are down 6.5%, Marks & Spencer have lost 5%, Dunelm (home furnishings) has slumped by 10%, and Games Workshop (small metal figurines) are down 5.7%.
Dow, S&P 500, Nasdaq down more than 1% https://t.co/rdgw4zhDCi pic.twitter.com/6xqMP7t8oD
2.47pm GMT
Steve Dresser is continuing to spot examples of retailers taking, er, liberties with their Christmas gift pricing...
The old favourite. Typically 4 for 6 in stores up and down the land. 3 bottles. A glass and a wooden unit you'll never use again.
18. pic.twitter.com/CluobUIVsH
2.21pm GMT
Asos's shares are still being thumped today; still down 40% at 25,47, a loss of over 16 today.
That has wiped almost 1.4bn off its market value today, down from 3.5bn to 2.1bn.
2.05pm GMT
Spice Girl turned fashion designer/businesswoman Victoria Beckham is also suffering from the tough retail environment.
Losses at Beckham's luxury fashion label rose to 10.2m last year, new figures show, up from 8.2m in the previous 12 months.
Victoria Beckham's luxury fashion label posts 2 million loss amid 'difficult' trading environmenthttps://t.co/8zCuG7xciF
1.14pm GMT
Amidst all the ASOS handwringing, I note that Amazon shares have fallen 22% from their all-time peak in September. Still higher than at any point prior to 2018, but still, the froth has settled a little. pic.twitter.com/VYiRXkzrpi
12.03pm GMT
The bad news keeps coming.... home furnishings and womenswear chain Laura Ashley is closing 40 stores.
Laura Ashley blames the "challenging environment" in the UK, and warned things could get worse...
Related: Laura Ashley to close 40 stores, putting hundreds of jobs at risk
11.49am GMT
Retail analyst Steve Dresser has spotted that UK retailer Fat Face is now offering cash off sales in the 2019, if shoppers will only buy something today....
With the ASOS news. Expect more of this, extending the new year sale via coupons. All hits margin of course. pic.twitter.com/QzP9cfFm2C
Of course. For some, like Debenhams. It's self inflicted woe. What was the buyer doing putting this at 28 to start with? pic.twitter.com/4Gsaja6ziu
11.31am GMT
George Salmon, equity analyst at Hargreaves Lansdown, reckons Asos is particularly vulnerable to Brexit gloom because it targets younger shoppers:
"The uncertainty around Brexit will be playing a major role, and it's probably no coincidence Asos's key demographic of 20-somethings generally harbour more concerns over the future of the economy post-Brexit than their parents."
11.06am GMT
Julie Palmer, partner at consultancy Begbies Traynor, points out that many smaller online shops have hit trouble this autumn.
Asos is not alone, although this morning's shock profits warning has obviously caused alarm...
"Seeing this goliath of the online retail world start to wobble shows that it's not just the physical high street that needs to take a look at its model and resilience.
"In fact, our own Red Flag Alert revealed that there has been a creeping undercurrent of online retailers suffering in the challenging climate this year with more than 8,000 online retailers in significant financial distress during Q3 - an increase of 8% since the same time in 2017.
11.03am GMT
Retailers across Europe are reeling from Asos's profits warning:
Retailers from #Adidas to #HugoBoss and everything in between are tumbling after #Asos warned on profits earlier today. pic.twitter.com/RbJMWSQeYZ
10.57am GMT
Brexit uncertainty has left many people too frightened to spend, says Hannah Maundrell, Editor in Chief of money.co.uk.
"Don't waste time stressing about what Brexit might mean for your finances, focus instead on getting on top of them so you're in the best possible place to enjoy whatever happens down the road.
It's as simple as keeping track of what cash you've got coming in and going out, looking for easy ways to pay big companies less - like switching your mortgage - paying off expensive borrowing and squirrelling away any spare cash you can afford so you have an emergency fund to fall back on just in case times get tight."
10.56am GMT
Ouch:
#Asos is no longer the biggest company on #AIM, which is the London Stock Exchange's #market for #growth companies: my story via @markets https://t.co/jMgHSMxnw7
10.26am GMT
If Asos is struggling, then many other retailers will be doing even worse, reckons Andrea Felsted of Bloomberg.
She argues:
To some extent, it's a surprise that the first seasonal shocker has come from Asos. It specializes in fast fashion. The conventional wisdom goes that internet retailers should be in a better position that beleaguered bricks and mortar stores when a squeeze on shopping comes.
But the clothing sector has been hit by the double whammy of warm weather and rocky consumer confidence. While Brexit looks like it might become the next convenient excuse for poor trading, senior retailers say the downturn since October has been real. It's as if someone switched the lights off.
If it's this bad for Asos, what hope does the rest of U.K. retail have this Christmas? https://t.co/f3FZruCfDr
10.23am GMT
Asos's problems show that the UK retail sector is in a serious fix, says Russ Mould, investment director at stockbrokers AJ Bell.
He writes:
It is not just that we've stopped shopping on the high street, it is that we're spending less overall.
"Everyone knew bricks and mortar retail was in trouble; after all, why struggle out to the shops and battle the crowds when everything you want is available at the click of a button from the comfort of your own home?
10.18am GMT
Kate Heseltine, analyst at Edison Investment Research, says:
"The significance of the warning by ASOS, one of the leading online retailers, could hardly be higher for the consumer sector. Coming at the end of its first quarter, it entails a substantial judgment call for the rest of the year to August 2019 - a call that management has made negatively.
It seems that Mike Ashley is not the only retailer to have experienced an 'unbelievably bad' November with online giant, ASOS, issuing a major profit warning in its Q1 trading update this morning.
10.12am GMT
Asos's CEO Nick Beighton has held a conference call with journalists, and explained that the company lost out during last month's Black Friday sales.
Beighton said Asos knocked 20% off everything on Black Friday, the same promotion as in previous years, but its rivals offered much bigger price cuts - and this means Asos will need to think about its approach to Black Friday.
"It's more than just the Brexit-related factors."
Asos CEO: This Is Just A Bump On The Road For Asos, Notes Long-Term Undented
10.01am GMT
In another blow to the UK economy, people's confidence in their finances has slumped to a six-month low -- one of the reasons behind Asos's problems?
"(The) data demonstrate the negative impact that political and economic uncertainty is having on households.
If sentiment continues to decline, the effect on the real economy may become more apparent in hard data if households begin to alter consumption behaviour."
9.42am GMT
Asos's profit warning is a clear sign that this Christmas will be tough for many retailers, warns business journalist Declan Curry:
My take on @ASOS for @NickFerrariLBC @LBC earlier this morning: online retailers were thought to be the big winners, the only winners, of Black Friday; ASOS is seen as one of the best online retailers around, yet it is also suffering. Black Friday a huge self-inflicted wound. pic.twitter.com/zYBgCjImTr
It reinforces warnings from retail bosses like @houseoffraser & @SportsDirectUK owner Mike Ashley, and fmr @IcelandFoods & @Wickes chief @BillGrimsey - this Christmas is going to be really tough. They expect further closures across the High Street in the New Year.
. @ASOS shows online retailers are not immune either. Key point is how much prices had to be slashed to compete (it predicts full-year drop in its profit margins). But also note it's not just UK sales; its sales in Europe also squeezed as the economy there chills.
9.26am GMT
Just over a year ago on 15th November 2017 @ASOS market cap was 5.06bn. This morning it currently stands at 2.03bn.
9.25am GMT
Asos's shares are plumbing new depths.
They're now down 42% at 24.24, from 41.86 on Friday night.
9.05am GMT
Several commentators are blaming Brexit for at least some of Asos's woes.
Matthew Vincent of the Financial Times says:
Asos did not mention Brexit, but when it notes that "consumer confidence is increasingly fragile" it can only be talking about one factor. Why else would it have to resort to so much discounting and promotional activity that it expects to halve its operating margin?
Today's warning comes after consultancy Springboard said that the number of people visiting British shops in November was the worst since the 2008 recession, with so-called footfall at retail parks and high streets down 3.2 per cent on the year before. But, clearly, it is not just bricks and mortar shops any more.
Expect more warnings like this with Theresa May delaying the Brexit vote and extending uncertainty until after the most critical trading period of the year for the UK retail sector.
Brexit is the grinch that stole Christmas.
9.00am GMT
Overnight, retail analysts at Springboard predicted that consumer spending is unlikely to pick up this week.
Diane Wehrle, insights director at Springboard, predicted that sales will be 3% lower than last year, warning:
"We are not anticipating it will be a bumper week by any means,"
"Consumers are feeling nervous about what might happen in the new year, particularly around Brexit. So people are not prepared to splash out this Christmas and are reining back on spending.
Related: Brexit worries and bad weather cloud the Christmas high street
8.39am GMT
As an online-only retailer, Asos should be protected from the well-known problems hitting Britain's high streets.
But today's profits warning suggest that e-commerce is also struggling.
We do note softer consumer confidence in general - this is not just about the high street creaking under the weight of rising wage costs and legacy store portfolios. There has also been a weather factor - every retailer that ever existed blames the weather but to a degree we must accept it has been a factor this year.....
Online businesses have seemed immune but the warning from Asos today suggests they too are at risk from the cyclical slowdown. We must stress that the Asos warning is indicative of a cyclical slowdown rather than being suggestive of the structural problems facing the high street.
8.28am GMT
Retail analyst Nick Bubb says analysts are "shell-shocked" by Asos's profits warning this morning:
"The share price of Asos has been under some pressure recently, as if the City sensed that something might be amiss, but we certainly weren't expecting the online fashion giant to issue a huge profit warning today,"
8.18am GMT
Boohoo has just issue a statement to the City, insisting that it is not suffering from Asos's woes.
The company says:
Boohoo group plc, a leading online fashion group, is pleased to confirm that the group's trading performance remains strong, with record Black Friday sales across the group and continues to trade comfortably in line with market expectations.
The group will provide an update for the four month trading period to December 31st on January 15th 2019.
8.16am GMT
Asos's market capitalisation (the value of the company) has slumped from 3.5bn to 2.2bn
8.11am GMT
Shares in Asos have plunged by 35% at the start of trading in London.
That's an absolute rout, and shows that its profits warning has really worried the City.
8.11am GMT
Shares in high street chain Next have slumped by 5%, as Asos's pessimism chills the retail sector
8.05am GMT
The London stock market is open, and investors are racing to sell shares in clothing and retail companies.
In early trading:
7.59am GMT
#asos CEO Nick Beighton: 'I've been astonished at the level of promotions and discounting, especially around Black Friday' - and this is set to continue in coming months
7.58am GMT
Asos's problems aren't confined to the UK. It explains:
Trading conditions across our two largest markets of Germany and France, which account for c.60% of EU sales, have become significantly more challenging.
ASOS worrying for EZ is pessimism on Germany (recent -ve GDP print) & France (terrible PPI last week)
"trading conditions in 2 largest markets, Germany & FRance, become significantly more challenging, YTD +15% (UK +19%)
7.48am GMT
Asos isn't pinning its hopes on a late surge in Christmas spending....
#asos CEO Nick Beighton says in the first two weeks of December Asos has seen a "slight uptick but only marginal' in sales
7.47am GMT
Men have been buying fewer sneakers, apparently....
#asos CEO Nick Beighton says its customers are buying cheaper items and there has been a 'dramatic' slowdown in sales of mens' sneaker brands
7.45am GMT
Asos's chief executive is speaking to City analysts now.
Nick Beighton is blaming an 'unprecedented' surge in price cuts this autumn, which has badly hurt profits.
#asos CEO Nick Beighton on conference call, after shock profit warning: 'In fashion we are seeing an unprecedented level of discounting, certainly something I have not seen before, and that's across the board'
#asos CEO Nick Beighton: 'There's something in France and Germany that's affecting the consumer. It's not just the UK.'
7.42am GMT
Shares in Boohoo, a rival online fashion chain, are expected to fall by 5% this morning, as investors digest Asos's profit warning.
Rough trading session ahead for #onlinefashion retailers...that's right online not high street!! @ASOS profit warning has the stock called down 15-20% and @boohoo seen falling 5%
7.40am GMT
You can see Asos's profits warning online, here.
Here's the top line:
Oof not just the high street that's struggling - Asos has slashed its forecasts for the year after a rough November pic.twitter.com/8eX4vv90tp
7.39am GMT
Asos reckons it is still outperforming the wider UK retail sector, as weak consumer confidence hits shops hard.
It says:
In the UK, ASOS continues to materially outperform in its home market with sales growth in the year-to-date (1 September through 30 November) of +19% (cc: 19%), although this has been achieved at the cost of more promotional activity than initially planned and consumers buying into lower priced product.
Consumer confidence is increasingly fragile as evidenced by the most recent BRC data.
7.35am GMT
City traders are predicting that Asos's shares will tumble by 15% to 20% when trading begins, in under half an hour.
7.33am GMT
Asos has been one of the leading lights in the UK retail sector for years, so today's profits warning is a serious issue.
Here's some early reaction:
First profit warning of the week, ASOS. Blames: the weather, heavy discounting by rivals.
Even Asos has had a profit warning. The end of the world is nigh
Hot on the heels of Mike Ashley saying November "smashed" retailers to pieces, Asos, thought to be immune from any slowdown, says the month was "significantly behind expectations" in a shock update https://t.co/kWDjmquFJc
Weak November trading not just the high street then - a this morning's profit warning from Asos testifies. Batten down the hatches....
Retail must be in a really bad way for top online retailer Asos to warnhttps://t.co/H0dAr7agEE
7.27am GMT
Asos's CEO Nick Beighton says:
"We achieved 14% sales growth in a difficult market, but in the light of a significant downturn in November, we think it's prudent to recalibrate our expectations for the full year.
We are taking all appropriate actions and our ambitions for ASOS have not changed".
7.27am GMT
ASOS has slashed its forecasts for sales growth and earnings, following weak trading in November.
Gross profit margins will be narrower than last year, as the company is forced to discount its clothing. The company is also trimming its capital spending plans, as it hunkers down.
7.18am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
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.
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. We have recalibrated our expectations for the current year accordingly.
Related: High street at risk of being 'smashed' by weak spending, Mike Ashley warns
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