Asos shares sink after sales fall behind expectations
Shares in e-commerce fashion firm Asos have tumbled after the company reported sales short of expectations and vowed to extend its cost-cutting programme in a bid to secure “even stronger profitability foundations”.
The London-based business said it “had planned to shift gears” from rebuilding its commercial model towards “re-engaging with customers.”
“Instead, more opportunity to reduce fixed costs and drive further variable cost optimisation were explored and the business focus remained on securing even stronger profitability foundations that will deliver further material improvements to ASOS’ cost base in FY26 and beyond,” Asos said.
Asos reported “lower than expected” gross merchandise volume, a measure of the value of goods sold, while group turnover was below market estimates.
However, the firm’s profit margins were up by 350 basis points as it “continues to focus on higher quality sales against a soft consumer backdrop.”
Stock slump
The stock was down 11 per cent to 261p shortly after 8am on Tuesday morning. It has sunk more than 40 per cent since the start of the year.
“Demonstrating relevance and growth will be key to investor sentiment,” Peel Hunt analysts said, adding that their own estimates projected company turnover would be down 12 per cent year on year, below the bottom of the range guided.
The company’s pre-tax earnings guidance at the lower end of its £130-150m guided range represented a 10 per cent downgrade to market expectations.
Asos said its cost-cutting measures included renegotiating supplier contracts, mothballing one of its fulfilment centres and taking “a more targeted approach” to customer acquisition.
“Together, these changes establish a structurally higher gross margin profile and stronger, more profitable underlying economic model that Asos can grow in a sustainable fashion,” Asos said.