Wet summer hits ASOS's financial performance – but not all high street competitors

ASOS shares fell greater than 5% on Tuesday morning, an additional drop in a 12 months the place inventory already misplaced 38% in worth, after firm outcomes confirmed gross sales contracted.

Sales fell 15% within the three months to the top of September, in contrast with the identical interval a 12 months earlier, that means gross sales for the final 12 months fell 11%.

Wet climate in July and August was blamed – echoing the rationale official figures confirmed retail gross sales fell in July.

But ASOS’s fall in gross sales was far sharper than the general drop in shopper spending: retail gross sales contracted 1.1% in July and grew 0.4% in August. Figures for September aren’t but accessible.

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Rise in retail gross sales by 0.4%

And whereas July was one of many wettest in UK historical past, it did deliver on-line gross sales to the very best stage for the reason that pandemic.

Blame for the web large’s weak efficiency was additionally positioned on the foot of a “deterioration in the UK clothing market”.

Not all corners of the garments market, nevertheless, have faired poorly. UK rivals comparable to Next and Primark have upgraded their revenue outlook of their newest bulletins.

ASOS on Tuesday stated its earnings can be on the decrease finish of forecasts – between £40m and £60m.

But the image was not all poor. Order profitability was up 35% as the corporate started charging for purchasers to return objects and restricted purchase now pay later (BNPL) choices.

Fewer objects are being returned, the outcomes stated.

Following the outcomes ASOS’s share value dipped to as little as 361.35p, earlier than recovering later within the day to 380.68p

The firm had been valued at greater than £6bn in 2018, higher than the worth of excessive road opponents Marks & Spencer and Next.

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The drawback is the broader financial local weather, stated AJ Bell’s funding director, Russ Mould.

The moist climate “merely exacerbated a situation where its customer base has less disposable income to expend on items they may only wear a handful of times”.

“In terms of what the company itself can control it is doing a reasonable job – reducing inventory by more than expected, albeit through heavy promotional activity, and keeping a tight rein on costs,” he stated.

“The danger for ASOS is it is just no longer as relevant in a world where people can buy clothes in stores again and where the tide has turned away from the whole fast fashion concept.”