The shares of the biggest online-only fashion retailer in the U.K. – Asos Plc sharply decreased by as much as 42% in early trading Thursday, reducing its market value by about 1.7 billion pounds (2.9 billion dollars). This happened after the company warned that it expects its annual profit to be lower than initially projected, due to strong performance of the British pound, infrastructure investments and higher promotional activity.
Asos Plc made a trading statement, which was not planned and cut its full-year forecast for earnings before interest and tax margin guidance from 6.5 to 4.5%. The international sales of the company also grew at a lower-than-projected 17% in the three months that ended May 31st, due to strong performance of the British currency.
Mr. Nick Robertson, who occupies the position of Chief Executive Officer of the company said in a conference call with reporters, which was cited by the Wall Street Journal: “There has been an unusual combination of factors that affected our profitability this year. Some of these are within our control, such as the investment in our IT and infrastructure as well as startup costs in our China business…and we wouldnt change any of that. But some are out of our control, principally the significant strengthening of sterling, which has hit our sales hard in our growing international business.”
The share-decline was the biggest one the company has experienced since its initial public offering in 2001. They opened at the price of 2,626 pence today, which is 42% lower than the close of 4,533 pounds on Wednesday.
This is the second major blow the company suffers in less than three months. As reported by Bloomberg, the Global Research Director of Conlumino – Maureen Hinton commented: “Just because you are online, doesnt mean you will be successful. You still have to have the same attributes as a strong fashion brand offline.”
Asos Plc was losing 27.92% to trade at 3,260 pence per share by 11:58 GMT, marking a one year change of -15.06.%. According to the Financial Times, the 22 analysts offering 12-month price targets for Asos Plc have a median target of 6,125.5, with a high estimate of 8,000 and a low estimate of 2,500. The median estimate represents a 35.43% increase from the last price of 4,523.
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