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Author: Alan LittleDate: 2021-10-12

ASOS (ASOS) -13% on full-year revenue and profit forecast misses

ASOS (ASOS) shares fell sharply on Monday after its revenue and profit forecasts underwhelmed and brokers said that the retailer will need to work hard to drive growth.

ASOS (ASOS) shares plunged 13% in London on Monday after revenue growth and profit forecasts for the full year missed the consensus and brokers raised concerns about “supply chain problems”.

Just days after Boohoo (BOO) slipped on its medium-term prospects, ASOS was under the same scrutiny as its 10%-15% revenue growth forecast missed the +18% expectations, as did profits of £110m-£140m versus £193m.

It is a worrying sign for one of the big winners during the pandemic when consumers flocked to the online fashion retailer’s app to purchase clothes and it set out plans to hit £7bn in annual sales.

Hargreaves Lansdown analyst Sophie Lund-Yates cited rising freight and labour costs as issues, alongside an inability to secure the “right stock” due to ongoing problems with its supply chain.

The latter is a common problem for businesses in 2021, but ASOS is not in a position where it can expect demand to remain as strong as during the last 18 months.

Lund-Yates noted that while the British retailer remains a “huge player” in online shopping, COVID-19 has forced former offline-focused rivals to overhaul and improve digital offerings.

The growing competition in the space means that ASOS will now have to “peddle hard” to increase its market share.

AJ Bell investment director Russ Mould also said on Monday that the fashion industry might not be in the best place after a similar “gloomy update” from Boohoo late last week.

It has also been confirmed that chief executive Nick Beighton will step down at ASOS, with Mould noting that he had felt the pressure after struggling to “sustain” the company’s momentum.

ASOS shares cratered on the London Stock Exchange on Monday, falling 13.41% by close to 2,408.00p.

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