Asos sends tremors across the city
In making an unscheduled update on December 17th advising investors that its growth projections for the year to August were no longer in the 20 – 25 per cent range, but down to 15 per cent, Asos sent its share price into nosedive, taking competitor Boohoo’s and other retailers’ share prices with it. Asos said that discounting across the whole fashion sector had made it necessary for it to follow suit and offer 20 per cent off all products on Black Friday after an overall disappointing November. The business also denied that it had lost market share, saying that overall consumer spending was down. It reported sales of £656m for the three months to 30thNovember which was 14 per cent higher than last year. Its average selling price was down by 6 per cent with basket size up 3 per cent, but basket value down by 3 per cent. Beighton confirmed that in October Asos had reduced its advertising spend from 6 per cent of revenue to 4 per cent and that there were no plans to increase it. It has instead been developing new in-house brands and investing in AI and voice tech to improve its conversion rate.
In response to the effect on its share price Boohoo issued its own update in which it said that Black Friday sales continued to trade “comfortably in line with market expectations” and this was sufficient to reduce the share price drop to 10 per cent.
It later emerged that Asos CEO Nick Beighton had sold 22,808 Asos shares mere weeks earlier than the update, when the share price stood at £54.49p, raising a total of £1.242m, only to then buy back 3,645 shares on 18 December at £27.35p.