Asos profits at the low end as wet summer hits growth

In a detailed fourth-quarter trading update, the online retailer said that adjusted like-for-like sales were down 15% in the three months to 3 September, slightly worse than the 14% decline seen in the third quarter.

Sales continued to fall across the group's four main geographies – the UK, EU, US and Rest of World – but the downturn worsened in every region except the EU.

In the UK in particular, a wet July and August dampened sales growth, and while a stronger-than-expected June (due to the hot weather) offset this on the top line, the phasing of sales during the quarter had a big impact on the year-end cash flow position.

Adjusted gross margins for the second half as a whole were up just 150 basis points year-on-year, below previous guidance of a 200bp improvement, due to the investment in promotional activity to reduce inventory levels.

As a result, "EBIT is expected around the bottom of the guided £40m to £60m range, with free cash inflow in H2 now expected to be c.£60m excluding refinancing costs (previously £150m), principally as a result of timing effects that will reverse in September and October."

All other guidance remains unchanged.

The result was a 11% fall in adjusted LFL sales for the financial year, accelerating from the 9% decline registered during the first nine months of the year.

In a statement, chief executive José Antonio Ramos Calamonte said: "ASOS has delivered on the Driving Change agenda and as a consequence is a leaner and more resilient business 12 months after its launch. We have reduced our stock balance by c.30%, significantly improved the core profitability of the business and generated cash against a very challenging market backdrop