ASOS warns over earnings as summer sales drop

ASOS has warned over earnings and revealed UK sales tumbled 16% in the final quarter as consumer demand dropped in the face of rocketing household bills.

The group reported a fourth quarter decline leaving like-for-like comparable UK sales 13% lower overall in the year to 3 September.

Total comparable sales fell 15% in the final quarter and 11% over the year.

ASOS warned that full-year underlying earnings are now expected at the bottom end of its £40 million to £60 million guidance, while it said cash flow had suffered a £60 million hit from the weaker July and August trading.

It said this cash flow impact would unwind in September and October.

But added that despite the summer sales blow, it expects to be profitable again in its fourth quarter, with turnaround efforts having driven around £300 million of profit improvement and cost savings – in line with targets.

Jose Antonio Ramos Calamonte, CEO at ASOS,  insisted the online retailer was a "leaner and more resilient business" after a year of his overhaul plan.

"We have reduced our stock balance by around 30%, significantly improved the core profitability of the business and generated cash against a very challenging market backdrop," he said.

ASOS recently cheered returning to profitability in its third quarter thanks to recovery efforts.

But sales have suffered as consumer spending took a knock, with customer demand waning in the face of rocketing household bills. The firm has also experienced supply disruption and surging cost pressures over the past year.

ASOS said it has also been losing customers amid the overhaul, with active customers down around 9% year-on-year at 23.3 million – a fall of about 3% since the third quarter.