Asos issues profit warning as consumer spending slows amidst rising bills

Online fashion giant Asos said it saw “good growth” in June and July and expects total sales for the year to August 31 to remain within market expectations.

However, it said it is now witnessing “the impact of accelerating inflationary pressures on consumers and a slow start to Autumn/Winter shopping”.

The company employs thousands of people at its giant warehouse in Barnsley where all of its products are sent for processing before being sent out for delivery to British customers.

Profits for the firm are now anticipated to be “around the bottom end of company guidance” due to the slowdown in activity.

It told shareholders it is due to report sales growth, at constant currency, of around 2% for the year, with net debt of around £150 million.

“While Asos remains cautious about the outlook for consumer spending, it continues to make strategic progress and manage the business for the current environment,” the company added.

It comes only three months after Asos previously cut its sales and profit outlook, warning in June that it witnessed a sharp rise in returns as shoppers started to cut back their spending.

Shares in the business have fallen more than 75% over the past 12 months amid turbulent period, which saw Nick Beighton step down as chief executive late last year.

In June, the retailer promoted chief commercial officer Jose Antonio Ramos Calamonte to the top job and named non-executive director Jorgen Lindemann as chairman in a clean sweep at the helm.

Inflation is currently running at 10.1% in the UK, putting major pressure on discretionary spending by consumers.

Business groups have welcomed the Government’s measures this weeks to mitigate energy price rises for households and businesses.

Liz Truss has announced energy bills for the average household will be frozen at no more than £2,500 for the next two years while businesses will be provided with equivalent support for an initial six months.

Jonathan Geldart, Director General of the Institute of Directors, said it was particularly encouraging that the intervention would put downward pressure on inflation, which he believed had been top of the business worry list for almost a year.

“We also welcome the reiteration of the Government’s commitment to achieving our net-zero targets, as well as a long-term review of energy regulation to fix underlying problems, the ambition to become a net exporter of energy by 2040, and pricing renewable energy through contracts for differences rather than at the marginal cost.

“What we need now is an external reassurance that the scale of the intervention does not jeopardise the public finances. That’s why it’s crucially important that the Office for Budget Responsibility can swiftly produce its independent assessment of the impact on government debt and the wider macroeconomy.”