Asos shares traded near a 12-year low as investors worried about the impact of the cost-of-living crisis on fast fashion retailers.
The FTSE 250 business fell 2.6 per cent, or 18p, to 667p after reports over the weekend that it had privately informed City analysts that its earnings for the year to the end of August will be at the lower end of expectations.
In June the company forecast profits for the year of between £20m and £60m, much lower than its original forecast of £110m to £140m.
Fashion Victim: Asos fell 2.6% after reporting over the weekend that it had privately informed City analysts that its earnings will come in at the lower end of expectations
It blamed high customer returns for the downgrade. Asos also warned analysts that revenue growth for the coming year is likely to fall below market forecasts of 9.8 percent.
An anonymous analyst said he was “slightly uneasy” about how the company is handling expectations.
Meanwhile, Eleonora Dani, an analyst at brokerage Shore Capital, said she was worried about an orderly market for Asos shares because the company had “deliberately selective discussions with analysts.”
She added, “We would be very critical of the possibility, let alone the reality, of such behavior.”
Reports of its forecasts being cut are further bad news for Asos, which has recently been marred by a slew of negative updates including the departure of its chief financial officer, an investigation by regulators into its ‘green’ claims and complaints from suppliers about canceled orders.
The earnings forecast is also likely to have investors increasingly worried that the outlook for trading is clouding over.
Sentiment appeared to weigh on the sector as a whole, with rival Boohoo’s shares falling 2.3 percent, or 1.03p, to 43.17p.
Stock Watch – Ashtead Technology
Ashtead Technology Shares briefly traded near record highs after the company announced it had bought a Norwegian firm specializing in underwater dredging.
The equipment rental company, which was listed in London last year, acquired WeSubsea in a deal worth £5.6m to strengthen its position in the subsea market.
It came as Ashtead Tech reported profits of £7.6million for the six months to the end of June, up from £3.9million a year ago. By the close of trading yesterday, however, shares were down 0.2 percent, or 1 pence, at 260.5 pence.
Retailers both online and on the high street are coming under increasing pressure as the falling cost of living is forcing people to cut back on non-essential items like new clothes.
The FTSE 100 rose 0.09 percent or 6.24 points to 7287.43, while the FTSE 250 fell 1.19 percent or 223.54 points to 18629.68.
Markets appeared to largely ignore Conservative Party members’ election of Liz Truss as party leader and prime minister, and seemed to pay much more attention to the growing energy crisis in Europe after Russia’s state-backed energy giant Gazprom shut down the key Nord Stream 1 gas pipeline end last week indefinitely.
Hargreaves Lansdown analyst Susannah Streeter said the shutdown was “the worst-case scenario” for European leaders and seemed to show that Russia was using energy supplies as its “great weapon” in the war in Ukraine.
UK natural gas prices jumped over 20 percent after the gas pipeline shut down, while oil prices also jumped, sending Brent crude above $96 a barrel.
As a result, shares in the energy giants got a boost, with Shell rising 1.03 percent, or 24 pence, to 2348 pence and BP rising 2.1 percent, or 9.65 pence, to 463.35 pence.
Big miners, many of whom derive most of their earnings overseas, have been among the biggest blue-chip climbers amid weak sterling.
Glencore was up 4 per cent or 18.25 pence to 471.5 pence, Antofagasta was up 1.8 per cent or 19.5 pence to 1121 pence, Anglo American was up 0.6 per cent or 17.5 pence to 2769 pence and Rio Tinto rose 0.7 percent, or 32 pence, to 4732.5p.
Veterinary drug company Dechra Pharma reported a sharp rise in earnings as it benefited from higher demand following a pet ownership boom during the pandemic.
The company posted a profit of £96m for the year to the end of June, up 16.2 per cent year-on-year, while revenue rose 13.8 per cent to £682m.
But shares fell 10.6 percent, or 370 pence, to 3126 pence, which eToro analyst Adam Vettese attributed to concerns about the company’s “high valuation”.
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