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LONDON, United Kingdom — ASOS cut its sales-growth guidance after a "significant deterioration" in November, showing that the gloom in the UK's retail business is spreading from brick-and-mortar stores to online sellers.
The warning confirms that weakness in UK retailing is widespread in the run-up to Christmas. Last week, Sports Direct International chief executive Mike Ashley warned of an “unbelievably bad” November, sending the shares off a cliff.
The ASOS announcement, which cited economic uncertainty, low consumer confidence and a high level of discounting, shows that retailers can’t rely on online operations to make up for a decline in stores this year. If December doesn’t improve, the New Year may bring more profit warnings, or worse, to the sector.
Retailers such as Debenhams and Marks & Spencer, which are in the midst of turnaround plans, may be particularly vulnerable, and the warning could hit shares of other retailers on Monday. The UK’s shopping districts have already been decimated by a series of collapses, including the insolvency of department-store chain House of Fraser, which Ashley rescued earlier this year.
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ASOS, which specialises in affordable fashion for young people, said business in November was “significantly behind expectations” and cut its outlook for full-year growth to about 15 percent, from a previous range of 20 percent to 25 percent.
The retailer’s stock is down 38 percent this year, compared with a 24 percent decline for the FTSE All-Share General Retailers Index.
By Eric Pfanner and William Mathis; editors: Eric Pfanner and John J. Edwards III.
