Asos has issued another earnings warning, sending its shares down one-fifth on Thursday, with the online fashion retailer blaming rising inflation for a rising rate of product returns.
The London-based group said it expected the adjusted pre-tax profit to be between £ 20 million and £ 60 million, a substantial reduction from its previous target of £ 110 million to £ 140 million before to adjust for the impact of the withdrawal from the Russian market.
Rival Boohoo also set higher performance rates in a scheduled update. He did not adjust his forecasts, but his actions also fell sharply.
Asos told analysts that there had been a marked increase in yields from March to April and that this rate was expected to persist for the rest of the year.
Chief Operating Officer Mat Dunn said the company believed its customers were now “feeling the impact of rising inflation,” noting that the increase had coincided with rising bills. energy and payroll taxes in the UK.
Returns generate profits for online retailers because the processing is largely manual and returned items often need to be highlighted when they are sold.
However, Dunn downplayed the possibility of charging for returns, as Spanish fashion rival Zara has recently begun to do. “We still think free returns are a key part of our offering,” he told investors in a call. “There are many other things we could do [to reduce costs] if the behavior persists ”.
The latest alert comes after a warning in October last year, which sparked the departure of then-CEO Nick Beighton. Dunn has been running the company ever since, but had indicated he did not want the top job.
Asos said on Thursday that José Antonio Ramos Calamonte, who previously worked at Inditex and Carrefour and is currently a commercial director, would rise to the top job and that Dunn would return to the position of CFO he previously held.
Ramos told investors he was “fully committed” to the international expansion strategy that Asos outlined after Beighton’s departure.
Jørgen Lindemann, who was appointed non-executive director last November, will succeed Ian Dyson as chairman. Lindemann spent five years on the supervisory board of Zalando, the German fashion market where Bestseller is also an investor, Asos’ main shareholder.
Rival Boohoo, which also issued a commercial update on Thursday, was less depressed. He also noted the normalization of return rates and said that although sales for the three months to the end of May were down 8% from the same period last year, they were still 75% higher. at pre-pandemic levels.
It did not change its previous focus on single-digit low-growth sales and underlying profit margins from 4 to 7 percent, but Andrew Wade, an analyst at real estate agent Jefferies, said the company’s orientation on first-half flat income would now be. “a stretch” and that reduced its year-round forecast by 9 percent.
Boohoo shares fell 13 percent to 55 percent. in the first negotiations on Thursday.