Asos warns over earnings as wet weather hits summer sales

The fast fashion firm said full-year underlying earnings are expected at the bottom end of its £40 million to £60 million guidance.

Figures showed sales grew by just 1% to £3.94 billion over the past financial year (Asos/PA)

Online fashion firm Asos has warned over earnings and revealed UK sales tumbled by 16% in its final quarter as wet weather in July and August knocked demand for clothes.

The group said the poor weather compounded woes amid a worsening UK clothing market, with the fourth quarter decline leaving like-for-like comparable UK sales 13% lower overall in the year to September 3.

Total group comparable sales fell 15% in the final quarter and 11% over the year.

Asos warned that full-year underlying earnings were now expected at the bottom end of its £40 million to £60 million guidance, while it said cash flow had suffered a £60 million hit from the weaker July and August trading.

We have reduced our stock balance by around 30%, significantly improved the core profitability of the business and generated cash against a very challenging market backdrop

Jose Antonio Ramos Calamonte

It said this cash flow impact would unwind in September and October.

But the group said that despite the summer sales blow, it expects to be profitable again in its fourth quarter, with turnaround efforts having driven around £300 million of profit improvement and cost savings – in line with targets.

Jose Antonio Ramos Calamonte, chief executive of Asos, insisted the clothing retailer was a “leaner and more resilient business” after a year of his overhaul plan.

“We have reduced our stock balance by around 30%, significantly improved the core profitability of the business and generated cash against a very challenging market backdrop,” he said.

Asos recently cheered returning to profitability in its third quarter thanks to recovery efforts.

But its sales have suffered as consumer spending took a knock, with customer demand waning in the face of rocketing household bills, while the firm has experienced supply disruption and surging cost pressures over the past year.

Asos also said it has also been losing customers amid the overhaul, with active customers down around 9% year on year at 23.3 million – a fall of about 3% since the third quarter.