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Shares in Asos traded near a 12-year low as investors fretted over the impact of the cost of living on the fast-fashion retailer.
The FTSE 250 traded down 2.6 per cent, or 18p, to 667p at the weekend after City told analysts privately that profits for the year to the end of August would be at the lower end of expectations.
In June, the company was forecasting profits for the year of between £20m and £60m, well below previous forecasts of between £110m and £140m.
Fashion casualty: Asos fell 2.6 percent following weekend reports. He had privately told City analysts that profits would be below expectations.
He blamed the decline on high levels of customer churn. Asos warned analysts that sales growth for next year could fall short of market forecasts of 9.8 percent.
One unnamed analyst said the company was ‘slightly troubled’ by how it was managing expectations.
Meanwhile, analyst at brokerage Shore Capital, Eleanor Dany, said he was concerned about finding an orderly market in Asos shares, which was evidence that the company was ‘deliberately talking to analysts’.
She added: ‘We never consider the reality of such behaviour, we take a very dim view of the possibility.’
The forecast collapse reports more bad news for Asos, which has been marred by a series of negative updates, including the recent departure of its finance chief, canceled orders over managers’ ‘green’ claims and an investigation by regulators about supplier complaints.
The profit forecast may have investors worried that the outlook for retailers is darkening.
The sentiment appeared to be weighing on the sector as a whole, with shares in rival Buhu down 2.3 per cent, or 1.03p, to 43.17p.
Stock Clock – Ashtead Technology
Ashtead Technology Shares briefly traded higher after a Norwegian firm that specializes in offshore drilling announced a buyout.
Last year it bought London-listed equipment rental firm Wesubsea for £5.6m to strengthen its position in the subsea market.
Ashtead Tech reported a profit of £7.6m for the six months to the end of June, up from £3.9m a year ago. However, by the end of trading yesterday, shares were down 0.2 per cent, or 1p, at 260.5p.
Retailers both online and on the high street are coming under pressure as the cost of living forces people to cut back on non-essential items such as new clothes.
The FTSE 100 fell 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 have largely shrugged off the election of Leasing Truss as party leader and prime minister, appearing to focus more on Europe’s escalating energy crisis after Russian state-backed energy giant Gazprom shut down the Nord Stream 1 gas pipeline. At the end of last week, the pipeline for an indefinite period.
Hargreaves Lansdowne analyst Suzanne Streater said the shutdown was a ‘worst case scenario’ for European leaders and appeared to show Russia was using energy supplies as a ‘big weapon’ in the Ukraine war.
UK natural gas prices rose more than 20 percent following the pipeline shutdown, while oil prices sent Brent crude above $96 a barrel.
As a result, shares in the energy giants Shell rose 1.03 per cent, or 24p, to 2348p and BP rose 2.1 per cent, or 9.65p, to 463.35p.
Major miners, many of whom earn their earnings overseas, were among the biggest blue-chip climbers on the back of a weak pound.
Glencore added 4 per cent, or 18.25p, to 471.5p, Antofagasta added 1.8 per cent, or 19.5p, to 1121p, Anglo American added 0.6 per cent, or 17.5p, to 2769p and Rio Tinto added 0.72 per cent. , to 4732.5 p.
Veterinary medicine firm Dechra Pharma has reported a sharp increase in profits due to increased demand following the rise in pet ownership during the outbreak.
The firm reported profits of £96 million for the year to the end of June, up 16.2 per cent year-on-year, while revenue rose 13.8 per cent to £682 million.
But shares fell 10.6 per cent, or 370p, to 3126p, with eToro analyst Adam Vettes raising concerns about the company’s ‘high valuation’.
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