ASOS plummets on profit warning as sales growth slows

5th Jun 2014 07:46

Shares in online fashion retailer ASOS plummeted on Thursday after the company cut its margin guidance for the full year and blamed a strong pound for a slowdown in growth in the third quarter.The stock, which has surged in recent years to a high of 7,195p in early 2014, lost over 40% of its value in early trading on Thursday before coming back slightly.The company said that because of a higher mix of UK and European sales, which have lower retail margins, together with increased promotions, its earnings before interest and tax (EBIT) margin for the current financial year would be 4.5%, down from its previous forecast of 6.5%.Chief Executive Nick Robertson said that the company's profit performance this year "is not what we had hoped for due to an unusual combination of factors".Group revenues totalled £248.1m in the three months to May 31st, up 34% on last year on a constant exchange rate (CER) basis. This compared to the 35% CER growth registered in the first half.However, reported sales growth slowed dramatically to just 26%, from 34% in the first half, due to "sterling's continued strengthening", Robertson said.International retail sales grew by just 17%, a significant slowdown from 35% growth registered in the first half. International growth on a CER basis came in at 28% (first half: +37%).Nevertheless, UK retail sales growth accelerated to 43% in the third quarter, from 32% in the first half, and was described as "very strong".BC