Asos has said sales in August were weaker than expected and warned that full-year profits would be at the bottom end of its guidance, with the cost of living crisis hitting cash-strapped shoppers.
The online fashion retailer, which made more than £190m in profits last year, expects profits for the year to the end of August to be about £20m.
“Having seen good growth in June and July, sales in August were weaker than anticipated,” the company said in a trading update. “This reflected the impact of accelerating inflationary pressures on consumers and a slow start to autumn/winter shopping.”
The slump in sales has in the company downgrading its annual growth forecast to about 2%, from the 4% to 7% guidance issued in June.
Asos expects profits to hit the bottom end of its guidance, issued in June, of £20m to £60m.
The company’s shares soared during the coronavirus pandemic, when consumers turned to online shopping, but are now languishing at a 12-year low.
On Thursday the owner of Primark warned that it expected lower profits next year as it grappled with a strong dollar and soaring costs that had pushed up annual energy bills by about £100m.
Earlier this summer, Asos said it was experiencing a “significant increase” in returns in the UK and Europe, which would have a “disproportionate impact on profitability”.
Asos’s twentysomething customers were particularly affected by the cost of living crisis, with rents going up in many countries, along with the cost of petrol and food.
In May, the rival online retailer Missguided called in administrators after being issued with a winding-up petition by clothing suppliers who are owed millions of pounds.