Second profit warning strips £1.5bn off Asos as shares plunge 40 per cent

The former stock market darling Asos lost £1.5bn of its value yesterday after unleashing a massive profit warning, its second in three months.

The internet fashion giant admitted annual profits for the year would be nearly a third lower, blaming heavy discounting on its international websites.

Shares in Asos plummeted as much as 40 per cent, falling to a low of 2529p. They settled at 3124p, still a drop of 31 per cent, or 1399p, and less than half of the all-time high they hit in February.

Other London-listed online firms were hit by the profit warning, with fashion site Boohoo dropping 9 per cent and online grocer Ocado off nearly 5 per cent. The previously soaring value of Asos, whose stock had doubled in the year before March's profit warning, has been used as a benchmark to justify high share prices for the sector.

Nick Robertson, the company's chief executive, said he had been forced to increase promotions overseas, especially in Australia and Russia, because of a strong pound.

Playing down the warning, he said: "This is just a bump in the road. The reality is clearly not what we'd hoped for. Some factors are within our control; some are outside our control. Normally 3 per cent of our sales are on promotion; now it is 8 per cent, but a 5 per cent increase in promotional activity has not been enough to offset 25 per cent changes in currencies."

Pre-tax profits for the full year are now expected to be £45m, down from a predicted £65m. Last year's profits were £54.7m. Australia was hardest hit, Mr Robertson said, slipping from first to third place in the retailer's international markets in six months.

Sales overseas, excluding the US, rose just 1 per cent, after years of double-digit growth. UK sales rose 43 per cent and across the group the figure was 25 per cent. Analysts said Asos had overstretched itself building up its lines for women.

"We remain concerned that the ranges in womenswear have been expanded beyond the levels management can adequately control," said Freddie George, a retail analyst at Cantor Fitzgerald.

He added: "The company will now have to reduce the number of womenswear lines," which would have an impact on results.

In March the company had warned that profits would be hit by the cost of a warehouse upgrade and the high costs of trying to break into China.

Mr Robertson said yesterday that the costs of the expansion had not risen and he remained unapologetic about them. "Our shareholders are on board. Growth isn't for free. It involves investment in structure and investment in people," he said.

News
Russia Today’s new UK channel began broadcasting yesterday. Discussions so far have included why Britons see Russia as ‘the bad guy’
tv

New UK station Russia Today gives a very bizarre view of Britain

News
John Moore inspired this Coca Cola Christmas advert
people

News
people

Top Gear presenter is no stranger to foot-in-mouth controversy

Arts and Entertainment
Imelda Staunton as Dolores Umbridge in the Harry Potter films
books

New essay by JK Rowling went live on Pottermore site this morning

PROMOTED VIDEO
Sport
A Rutherford Raiders shirt with the PornHub sponsorship
football

Arts and Entertainment
Charlie Sheen said he would
tv

Charlie Sheen could be set to revive his role as a hedonistic womaniser

Arts and Entertainment
Daniel Radcliffe gives a strong performance in Horns
film

Review: Alexandre Aja's film is a Twin Peaks-style mystery

News
Apple CEO Timothy Cook
people
News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Jamie Oliver’s version of Jollof rice led thousands of people to post angry comments on his website
food + drink
Arts and Entertainment
Vividly drawn: Timothy Spall in Mike Leigh’s ‘Mr Turner’
film

Review: Mike Leigh's biopic is a rambling, rich character study

Arts and Entertainment
glastonbury
Arts and Entertainment
Shelley Duvall stars in Stanley Kubrick's The Shining
film
Arts and Entertainment
Shock of the news: Jake Gyllenhaal in ‘Nightcrawler’
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

The benefits of Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Day In a Page

The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes