Asos warns on profits as returns weigh

Retailer Asos warned on Thursday that full-year profits looked set to tumble as consumers struggling to navigate the current cost-of-living crisis returned items at an accelerated pace.

Asos said although sales rose in the three months ended 31 May, profits had been impacted by "inflationary pressures on consumers", with the group now expecting FY pre-tax profits to be somewhere between £20.0m and £60.0m - far below the group's January guidance for annual profits of £110.0m-140.0m

During the quarter, Asos saw sales rise 4% to £987.9m, fuelled by its UK and US divisions and the resolution of supply chain issues. However, Asos stated that an increased level of returns was now adding to both warehouse and delivery costs and meant that profits would take a hit if it was forced to slash prices in order to shift goods.

Outgoing chief executive Mat Dunn said: "What is now clear, based on the significant increase in returns rates that we have seen, is that this inflationary pressure is increasingly impacting our customers shopping behaviour.

"It is too early to tell for how long the current pattern of customer behaviour will continue but we are taking swift and decisive steps to minimise the impacts whilst continuing to deliver against the strategic initiatives we laid out in November that will ensure that Asos builds for the long-term."

Separately, Asos announced that José Antonio Ramos Calamonte and Jørgen Lindemann will take over as chief executive and chairman, respectively. Calamonte will take up the role with immediate effect, while Lindemann will succeed Ian Dyson on 1 August.

As of 0825 BST, Asos shares had slumped 15.34% to 982.0p.

Reporting by Iain Gilbert at Sharecast.com