Shares in Asos traded near 12-year lows as investors worried about the impact the cost-of-living crisis was having on the fast-fashion retailer.
The FTSE 250 business fell 2.6 percent, or 18 percent, to 667 percent 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, well below its initial forecast of £110m and £140m.
Fashion casualty: Asos fell 2.6% after reports over the weekend that it had privately informed City analysts that its earnings will be at the lower end of expectations
He blamed high levels of customer returns for the decline. Asos also warned analysts that sales growth for next year is likely to fall short of market forecasts of 9.8 percent.
An anonymous analyst said they were ‘a bit worried’ about how the company was managing expectations.
Meanwhile, Eleonora Dani, an analyst at brokerage Shore Capital, said it was worrying for an orderly market in Asos shares given evidence the firm was having ‘deliberately selective conversations with analysts’.
She added: “We would take a very dim view of the possibility, never mind the reality, of such behaviour.”
The reports of the cut in its forecasts are more bad news for Asos, which has recently been hit by a series of negative updates, including the departure of its finance chief, an investigation by regulators into its “green” claims ” and complaints from suppliers about canceled orders.
The profit forecast is also likely to make investors increasingly concerned that the outlook for retailers is getting bleaker.
The sentiment appeared to be weighing on the sector as a whole, with shares in rival Boohoo falling 2.3 per cent, or 1.03p, to 43.17p.
Stock Watch – Ashtead Technology
Ashtead Technology shares briefly traded near record highs after it said it had bought a Norwegian firm specializing in undersea cleaning.
The equipment rental firm, which listed in London last year, bought WeSubsea in a deal worth £5.6m to strengthen its position in the subsea market.
It came after Ashtead Tech reported profits of £7.6m for the six months to the end of June, up from £3.9m a year earlier. However, by the end of trading yesterday, the shares were down 0.2 per cent, or 1p, at 260.5p.
Both online and high street retailers are under increasing pressure as the cost of living forces people to cut back on non-essential items such as new clothes.
The FTSE 100 rose 0.09 percent, or 6.24 points, to 7,287.43, while the FTSE 250 fell 1.19 percent, or 223.54 points, to 18,629.68.
Markets appeared to largely shrug off the Conservative Party’s election of Liz Truss as party leader and prime minister, paying more attention to Europe’s growing energy crisis after Russian state-backed energy giant Gazprom shut down the key Nord Stream 1 gas pipeline. indefinitely late last week.
Hargreaves Lansdown analyst Susannah Streeter said the shutdown was the “worst-case scenario” for European leaders and appeared to indicate Russia was using energy supplies as its “big weapon” in the war in Ukraine.
Natural gas prices in the UK rose by more than 20 percent after the gas pipeline was shut down, while oil prices also jumped, sending Brent crude oil above $96 a barrel.
As a result, shares in the energy giants got a boost with Shell rising 1.03 per cent, or 24p, to 2,348p. and BP gained 2.1 percent, or 9.65 p.
Major miners, many of whom earn most of their earnings overseas, were among the biggest blue-chip producers on the back of the weak pound.
Glencore gained 4 percent, or 18.25 percent, to 471.5 percent, Antofagasta added 1.8 percent, or 19.5 percent, to 1,121 percent, Anglo American jumped 0.6 percent, or 17.5 percent, to 2769 per cent and Rio Tinto rose 0.7 or 32 per cent to 4732.5p.
Pet drug firm Dechra Pharma reported a strong rise in profits as it cashed in on higher demand following a boom in pet ownership during the pandemic.
The firm 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 per cent, or 370p, to 3,126p.
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. This helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to influence our editorial independence.
